MP Gatis Eglītis: Coalition has been dissatisfied with Znotiņa's performance for some time

While preparing amendments to the law on fighting dirty money, Gatis Eglītis, representing the New Conservative Party (Jaunā konservatīvā partija), who heads the Saeima's Financial Sector Supervision Subcommittee, has become embroiled in a conflict with Ilze Znotiņa, head of the Financial Intelligence Unit (FIU). She believes that the MP is fulfilling the order of a particular bank by weakening the Unit with his proposals. In turn, the politician insists that Latvia's demands are exaggerated, and only wants to make life easier for honest entrepreneurs.

G.Eglītis has rejected several proposals at the committee meetings, facing objections not only from the FIU, but also from other institutions.

At the initiative of several deputies, including G. Eglītis, a provision has been deleted from the draft law, which would require the true beneficiaries to have an impeccable reputation in the areas covered by the law. Latvia intended to significantly expand international requirements. Now the Ministry of Finance offers as a compromise the very minimum, limiting only convicted persons.

The Saeima has also debated whether the circle of persons who will have to comply with the norms of the law in the future has not been made too wide, thus creating an unnecessary administrative burden for business. The Ministry of Finance emphasizes that neither the European Union Directive nor the recommendations of the Financial Action Task Force (FATF) allow much flexibility in this regard. However, the authors of the law have tried to make the requirements less burdensome in those areas where the risk of money laundering is not so high.

You have succeeded in removing from the bill a provision that would require the true beneficiaries to have an impeccable reputation in the areas covered by the law. This provision could lead to the alienation of the company's shares even if no crime has been committed. Why do you think FIU wanted to implement it?

It was an FIU initiative to put something like that into this law. Let us remember that there was a huge stir in society, the coalition, and the government because everyone understands that there are huge risks when linking an impeccable reputation to concrete actions that can lead to the loss of property.

I myself went to the coalition with this issue, where I was allowed to submit a proposal on behalf of the coalition rejecting this provision. We do not want to see such nonsense.

At that time there were many people dissatisfied with the actions of the FIU, she [the head of the Financial Intelligence Unit Ilze Znotiņa] almost lost her job at that time, because that dissatisfaction [with I. Znotiņa's performance] has been present in the government and the coalition for while. It was just another spoonful of vinegar in it all.

Seeing the reaction in society, it was also politically important for us that honest entrepreneurs can do their job and that there is no such incomprehensible action on the part of the state. It was corrected, here I take the credit, I initiated the issue. The only criterion left is that if you have actually been convicted criminally, then the criterion of good repute can be questioned, but even then it cannot lead to the alienation of property.

Why did FIU want such a norm? There was no such thing written anywhere, in no recommendation, nothing that aggressive was asked of us in such a way. It was trying too hard or something even worse.

Why didn't Znotiņa lose her job in the end?

Maybe the issue was not on the agenda directly, but there was a lot of talk about it behind the scenes of the coalition.

You consider that the FIU's orders on freezing money cannot, in principle, be challenged, even though the Attorney General was entitled to decide whether the FIU was right or not. Why didn't this tool work?

There are several components. Firstly, the amount of information sent to the prosecutor's office, and secondly - the time factor. Very, very little time is given for these people or creditors whose money is potentially frozen, who are affected by these FIU orders, to prepare information for the prosecution. That is one. But the biggest problem is that people don't even know for which episode FIU has started the process. You do not know which of your activities started the process, because FIU requires a history of activities of ten, fifteen years. Therefore, this person usually does not know for which episode the process was initiated.

The most important thing that the Prosecutor General himself pointed out is that they have a conflict of interest. There is an illogical situation, on the one hand, the prosecutor is imposed as a filter, but, on the other hand, the same prosecutor's office must take the case forward. This is such an illogical situation.

You want to build the law in such a way that it catches the "big fish", but the small ones are not subject to additional bureaucratic burdens. What should be the dividing line?

I think it could be on a turnover basis, for example, subjects of law are not being bothered if their turnover is up to 100 thousand euros.

Here is an example. An accountant from Jēkabpils called me. She is self-employed, outsourcing to two small shops. She receives a statement that the SRS is conducting an audit of how she, this small, small accountant, exercises supervision over her activities.

The first thing she does - is shocked that there will be an audit. She searches the internet: what is Moneyval [Council of Europe's Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism], what is money laundering, seeks to understand something of the whole of the anti-money laundering directive. There are very, very many requirements. Instead of doing her job, she spends several days understanding how to respond properly to the SRS.

This illustrates the nonsense that, on the one hand, we have big money laundering schemes, big tax schemes, which are essentially money laundering, on the other hand, there is a little accountant in Jēkabpils who circulates very small amounts, just trying to make ends meet, but an abnormal burden gets placed on her. Instead of doing her work, she is wasting time.

It is very difficult with the Ministry of Finance and the FIU because it seems to them that everyone is a potential swindler, that everyone should be subjected to horrific supervision, that everything should be controlled. This is wrong. We need risk-based supervision - if there are specific sectors and companies that we know about and that supervisors know about because they keep track of cash flows, we put our resources in there.

We already have a problem with those AML issues, we will overcrowd the capacity of our law enforcement agencies so much that there will not be enough investigators, prosecutors, court capacity, not enough power to investigate other crimes. And no one has canceled those.

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