On Thursday, 13 June, the Saeima adopted in the final reading amendments to the Law on the Financial and Capital Market Commission (FCMC) imposing several measures to reinforce prevention of money laundering and combating the financing of terrorism in the financial and capital market.
The amendments extend the functions of the FCMC, and henceforth its objectives will also include the prevention of money laundering and the financing terrorism and proliferation. While keeping the FCMC's existing objective regarding the supervision of participants of the financial and capital market and the financial stability, the amendments were proposed following the recommendations by the Moneyval Committee in order to eliminate the possibility to use the financial sector of Latvia for money laundering and financing of terrorism.
The Draft Law also clarifies the existing functions and responsibility of the FCMC regarding the prevention of money laundering and the enforcement of international and national sanctions in the financial and capital market. The Law also stipulates a gradual replacement of the current management of the FCMC, including payment of compensation for leaving office.
Considering the general practice that heads of institutions are appointed for a period of five years, the current amendments changed the FCMC's model of management. The Law stipulates that henceforth the FCMC Council will have three Members, instead of the current five: the Chair and two Council Members. The Chair and the Council Members shall be appointed by the Saeima for a period of five years upon a proposal of the Cabinet of Ministers for the Chair and upon a proposal of the Chair for the Council Members. Contenders shall be selected by the Cabinet of Ministers in an open competition, and the same person may not hold the post of the FCMC Chair or Council Member for more than two consecutive terms.
According to the amendments, the Cabinet of Ministers shall nominate the contender for the post of the Chair of the Financial and Capital Market Commission by 1 October of the current year. Meanwhile, the current Head of the FCMC will perform his duties until the appointment of the new Chair or until discharged from the office by the Saeima.
Previously, the Chair and the Deputy Chair were appointed by the Saeima for a period of six years upon a joint proposal of the Minister for Finance and the President of the Bank of Latvia, while other Council Members were appointed by the FCMC Chair, and the number of consecutive terms of office for these posts was not specified.
The amended Law includes an updated list of requirements for the contenders applying for the post of the Chair or the Council Member. A contender, inter alia, must be a citizen of the Republic of Latvia, have a university degree in law, economics or financial management, be proficient in Latvian and English, and meet the requirements to qualify for the second category special permit to have access to official secrets.
In addition, the amendments clarify the procedure for removing the Chair or a Council Member from office during their term of office. The amended Law allows removal of the FCMC's Council Member on a proposal by 34 Members of the Saeima, as well as in cases such as withdrawal of the permit to have access to official secrets or downgrading of the permit category.
As regards the current management of the FCMC, the amendments stipulate that the FCMC's Chair or his or her Deputy will be paid one-off compensation in the amount of 80 % of the annual salary, if they resign and the Saeima relieves them from the office by 1 August of the current year. The compensation shall be paid from the FCMC's budget.
Finally, in order to ensure the continuity of service of the FCMC Council in cases when the Saeima relieves the Chair or at least one Council Member from office before the expiry of their term of office, the amendments stipulate that the Saeima can appoint the Chair or a Council Member for a period of up to six months.
Taking into account that the Law provides for a compensation for resigning, the Cabinet of Ministers is tasked to advise the Saeima by the end of next year on possible solutions regarding the officials of other independent authorities appointed by the Saeima.
The amendments to the FCMC Law are to enter into force on the next day following their proclamation.
Today, the Saeima also adopted in the final reading the related amendments to the Credit Institution Law, amendments to the Law on the Prevention of Money Laundering and Terrorism Financing, amendments to the Law on Official Secrets, amendments to the Law on Declaration of Cash at the State Border, and amendments to the Law on International Sanctions and National Sanctions of the Republic of Latvia.
Saeima Press Service