A while ago Latvia has adopted the Cabinet Regulations No. 162 dated 22 March 2016 “On the procedure to the State Revenue Service for submitting reports of suspicious transactions”, according to which the subject of the Law on the Prevention of Money Laundering and Terrorism and Proliferation Financing (in this particular case – the bank), having ascertained a suspicious transaction in the interpretation of this law, notifies the State Revenue Service about such suspicious transactions and persons whose country of residence (registration) is the Republic of Latvia and who meet the signs of suspiciousness set in the Law on Taxes and Duties.
Based on the Article 2 of the above-mentioned Regulations, the subject, i.e. the bank is obliged to immediately notify about a suspicious transaction by submitting to the State Revenue Service a notification drawn up in a manner specially prescribed by the law. The signs of suspiciousness of a transaction in the tax sphere established by the Law on Taxes and Duties have a number of special codes that are assigned depending on certain circumstances. For example, INN code (tax evasion).
For example, if the bank has information at its disposal, according to which it can be assumed that local employees receive their salary in cash without tax deductions in Latvia, then the bank may consider the withdrawal of funds from the account as a suspicious transaction by assigning the appropriate code, and send a message to the State Revenue Service. On the basis of the received notification, the State Revenue Service may initiate an administrative case, as a result of which the taxpayer may be brought to administrative responsibility.
The bank also sends messages about the suspiciousness of the transaction to the Financial Intelligence Unit of Latvia, which is entitled to require the bank to freeze the funds in the account.