The Bank of Latvia has developed guidelines for more effective sanctions risk management

The Bank of Latvia has developed “Guidelines for the creation and maintenance of an information technology system used in effective sanctions risk management” to support financial market participants in the creation of effective and result-oriented sanctions screening information technology (IT) systems. The guidelines include the conclusions reached in the thematic examination conducted by the Bank of Latvia, as well as examples of good and undesirable practices. In the inspection, the Bank of Latvia evaluated 45 IT systems used for sanction inspections of 22 financial market participants.

The Bank of Latvia has concluded that the majority of IT systems used by financial institutions for sanction screening can be assessed as generally effective and useful, while at the same time, deficiencies were found in all the examined institutions, which financial market participants – banks and non-bank financial institutions – were instructed to remedy.

The thematic review identified common reasons for creating an ineffective sanctions screening system, such as inadequate configuration, lack of updates, and weak involvement of the AML/CFT and sanctions risk management team in establishing, testing, and maintaining sanctions screening systems.

The Guidelines are a practical guide that aims to provide financial market participants with useful information on how to effectively manage sanctions risk.

In the guidelines, the Bank of Latvia has included information on the expected result, so that financial market participants can successfully fulfill the requirements of regulatory enactments regarding the management of sanctions risk, for example, that a risk assessment should be carried out regularly, the results of configuration and testing of the sanctions screening system should be documented, and measures should be implemented according to the specific risks of the institution. .

“Guidelines for the creation and maintenance of an information technology system used in effective sanctions risk management” are available here: https://www.bank.lv/images/Guidance_sanctions_screening_v1_LVL.pdf.