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The Financial Action Task Force (FATF) has published “Complex Proliferation Financing and Sanctions Evasion Schemes”. This report is an essential resource that promotes public and private sector understanding of the threats posed by the proliferation of weapons of mass destruction (WMD), as well as their implications for international security and the stability of the financial system. The publication analyses methods by which states, state-supported entities, and non-state actors seek to circumvent sanctions and finance WMD proliferation through complex financial and procurement schemes. The document also highlights key vulnerabilities in the financial system and provides practical risk indicators that can help identify such activities in a timely manner. The report (in English language) "The FIU notes that the information included in the FATF report may be particularly useful in assessing the application of European Union sanctions against Russia. We also draw attention to the fact that Russia’s cooperation with the Democratic People’s Republic of Korea is a factor that must be taken into account when assessing proliferation financing (PF) and sanctions evasion risks." IN BRIEF The current risk environment is characterized by state and non-state actors acquiring and/or sourcing dual-use goods, technologies, and knowledge through procurement networks.The Democratic People’s Republic of Korea is identified as the most significant PF risk source, widely employing cyberattacks and generating revenue through IT workers, a variety of other sectors and illicit activity to evade sanctions and obtain funding for its WMD program.The report identifies examples of sanctions evasion schemes involving Iran and Russia. Although these countries are not subject to UN proliferation-related sanctions and are not included in the FATF’s definition of PF risk, their actions pose significant threats.Emerging technologies and virtual assets play an increasing role in sanctions evasion schemes. To circumvent sanctions and PF-related export controls, complex schemes are used. Based on information submitted by the FATF Global Network, the report highlights four main typologies: Enlisting intermediaries to evade sanctions restrictions;Obscuring beneficial ownership information to access the financial system;Using virtual assets and other technologies;The use of maritime and shipping sectors. The report describes challenges and good practices related to the detection, investigation, and prosecution of PF and sanctions evasion, as well as domestic coordination and cooperation, and international collaboration with regards to PF and sanction evasion. FATF is an international organisation that sets and monitors standards to prevent money laundering, terrorism and proliferation financing (AML/CFT/CPF).

To help businesses develop and implement a set of measures for mitigating and managing sanctions risks in dealing with operators in high-risk sanctions countries, otherwise called an internal control system (ICS), the Financial Intelligence Unit (FIU) has published the guidelines “Sanctions risk management for business in heightened-risk countries”. Heightened-risk sanctions countries are those that do not impose sanctions against Russia and Belarus and which, due to their geographic location or other reasons, are used to circumvent the restrictions set out in sanction regulations, for example, delivering sanctioned goods to Russia or Belarus. The guidelines include explanation on: how to identify the sanctions risk inherent to your business by conducting a sanctions risk assessment;which types of transactions are considered to be at heightened sanctions risk;how to implement and carry out measures, including enhanced due diligence on business partners and transactions, to manage the identified sanctions risks;how to effectively cooperate with credit institutions, thereby facilitating transaction execution. The guidelines were developed by the FIU in cooperation with the Finance Latvia Association, Latvijas Banka, the Customs Board of the State Revenue Service, the Ministry of Foreign Affairs, and the Employers’ Confederation of Latvia. The guidelines are designed to help manage sanctions risks related to the EU sanctions against Russia and Belarus, however, they can also be used in the broader context of other sanctions risks. Exporters of high-priority goods can apply these guidelines to fulfil their obligation under sanctions regimes to develop and implement an ICS for mitigating and effectively managing sanctions risks. The guidelines currently are available in Latvian language here and will soon be available in English language in section "Guidelines".

On Tuesday, 10 June 2025, significant amendments will enter into force in Latvia regarding liability for the violation of international sanctions. The amendments provide for tougher criminal penalties, a new administrative liability mechanism and simplified reporting on violations of international sanctions. These legislative changes strengthen national efforts to effectively prosecute the violators of international sanctions. “As a European Union Member State, Latvia has the duty to ensure that any violations of sanctions are subject to effective, proportionate and deterrent penalties. By strengthening the framework of penalties for serious offences, while at the same time introducing administrative liability for minor violations, a noteworthy step has been made for enhancing the efficiency of all authorities involved in preventing sanctions violations as well as investigating and prosecuting such offences. This holds particular significance given Russia’s continuing aggressive war against Ukraine”, says Juris Stukāns, Prosecutor General of the Republic of Latvia. “These are significant changes aimed primarily at deterring potential sanctions violations and also making the process of investigation and prosecution quicker and more efficient. At the same time, criminal liability has been retained for the violation of financial sanctions as well as for offences linked to goods and services that support the continuation of Russia’s military aggression against Ukraine,” as explained by Deputy Head of the Financial Intelligence Unit of Latvia (FIU), Paulis Iļjenkovs. Tougher penalties for sanctions violations Section 84 of the Criminal Law introduces new qualifying elements of a criminal offence and also extends the maximum limits for custodial sentence thereby making it possible to impose stricter penalties for sanctions violations. Criminal liability will apply to actions involving goods and related services that are subject to sanctions, provided that the violation of sanctions is committed on a significant scale, specifically, the value of the goods or services is not less than EUR 10 000. At the same time, the existing threshold for criminal liability in cases of violations involving goods of strategic importance, firearms and their essential components, ammunition for firearms, goods or technology intended for military purposes, and also other objects of sectoral or targeted financial sanctions, has been maintained. Administrative liability for minor violations The Law on International Sanctions and National Sanctions of the Republic of Latvia has been supplemented with additional provisions, thus establishing administrative liability in cases where the terms of sanctions have been violated through the purchase, sale or movement of sanctioned goods across the national border of the Republic of Latvia or through the provision of brokering services, technical assistance or any other services involving these goods, or through any other prohibited action involving these goods, provided that the value of the goods or services is below EUR 10 000. Fines of up to EUR 10 000 and EUR 30 000 may be imposed on natural persons and legal persons respectively. This approach will simplify and enhance the handling of violations that do not create high levels of harm, while also ensuring the confiscation of goods subject to sanctions and deterring individuals from committing offences in the future. Simplified reporting procedures The amendments have simplified the procedures for reporting on violations of international and national sanctions (including circumvention, which is a form of sanctions violation) or attempted violations of international and national sanctions by designating a single authority, the Financial Intelligence Unit of Latvia, to which reports should be submitted. Based on these amendments, the Financial Intelligence Unit of Latvia has updated its Guidelines on Reporting Suspicious Transactions and Refraining from Execution of Suspicious Transactions, which will be published on the website of the Financial Intelligence Unit of Latvia available at: https://fid.gov.lv/en/roles-and-responsibilities/strategic-analysis-and-guidelines.  Amendments have been made to the Law on International Sanctions and National Sanctions of the Republic of Latvia, the Criminal Law, and the law On the Procedures for the Coming into Force and Application of the Criminal Law, thus ensuring the transposition of Directive (EU) 2024/1226 of the European Parliament and of the European Council of 24 April 2024 on the definition of criminal offences and penalties for the violation of Union restrictive measures and amending Directive (EU) 2018/1673.

On Tuesday, 20 May 2025, European Union (EU) Member States agreed to adopt the 17th sanctions package against Russia. The Financial Intelligence Unit of Latvia (FIU) urges businesses to attentively monitor any changes that may affect operations involving both goods and services. “Due to geographical location, Latvia is at an increased risk of sanctions violations. For proper sanctions compliance, businesses are encouraged to consult the FIU in case of any uncertainties,” said Deputy Head of the FIU, Paulis Iļjenkovs. Key elements of the 17th sanctions package: Extended sanctions lists The sanctions list has been extended to include 75 persons (17 natural persons and 58 legal persons), including from China, the United Arab Emirates, Turkey and other third countries. Additionally, sanctions target 28 natural persons, particularly law enforcement officers, investigators, prosecutors and judges, who, through their actions, have aggravated the human rights situation in Russia, including by restricting freedom of expression and opinion. New criteria for inclusion on the sanctions list The sanctions framework now includes criteria enabling measures against assets involved in Russia’s destabilising operations, including vessels that damage critical infrastructure. It also includes the possibility to prohibit the transmission or other facilitation of Russian propaganda channels in the EU. In addition to previous sanctions, the EU has introduced new restrictions on exports of goods that contribute to Russia’s military and technological progress, strengthening of defence and security sectors, and support the development and manufacture of military systems. Extended list of Russian shadow fleet vessels The sanctions list targets 189 additional shadow fleet vessels which contribute to the Russian Federation’s revenue to finance its war against Ukraine. A total of 342 vessels transporting Russian oil using risky and clandestine shipping practices are now on the sanctions list. Additional measures target businesses and insurers that support the activities of the shadow fleet, including those based in the United Arab Emirates, Turkey and Hong Kong. These measures and the price cap for oil have facilitated the decline in Russia’s oil trade revenues by EUR 38 billion since the introduction of EU sanctions. In March 2025, Russian revenues were 13.7% lower than in March 2023 and 20.3% lower compared to March 2022. More information on the new sanctions package in the Official Journal of the EU. The sanctions lists and other useful information is available on the FIU website. 24 February 2025 marked three years since Russia’s full-scale invasion of Ukraine. The EU reaffirms its commitment to support Ukraine and to keep up the pressure on Russia until a fair and lasting peace is achieved in Ukraine. From April 2024, the FIU is the national competent authority in matters related to the sanctions implementation.

The Financial Intelligence Unit of Latvia (FIU) informs that the entire stock of ammonium nitrate stored at SIA “Riga Fertilizer Terminal” (RFT) has been fully removed from the terminal by 6 May 2025. This action eliminates a potential environmental hazard that had been linked to storing this cargo. The decision to allow the sale of ammonium nitrate to a merchant registered in Latvia not subject to international sanctions was taken by the FIU on 5 March 2025 with the aim of eliminating a potential environmental risk. Latvian credit institutions have frozen all funds derived from the transaction in compliance with applicable sanctions. The fertilisers were subject to freezing under the sanctions imposed by the European Union in March 2022 in response to Russia’s military aggression against Ukraine. Currently, there are still other fertiliser cargoes at the RFT terminal that are not classified as explosive. These cargoes have been frozen in accordance with international sanctions requirements. Under the supervision of the State Environmental Service, RFT, as the terminal operator, is responsible for the storage of these cargoes and for ensuring compliance with all requirements set by laws and regulations, as well as by competent authorities. The FIU continues to work closely with the relevant authorities to ensure compliance with sanctions and to safeguard public security interests. Dmitry Mazepin, who is a sanctioned person, exercises indirect control over both RFT and the owners of the fertiliser cargoes stored at the terminal. For this reason, RFT business activity was halted, and it was required to ensure the safe storage of fertilisers until their removal. European Union law allows for sanctions exemptions, including in cases where urgent action is needed to eliminate significant environmental harm. From 1 April 2024, the FIU is the competent authority in Latvia for the application of sanctions exemptions. The FIU had earlier reported on the ammonium nitrate removal process that was still in progress.

The European Commission has launched the European Union (EU) Sanctions Helpdesk, a one-stop-shop to support EU small and medium-sized enterprises (SMEs) in complying with sanctions. The EU Sanctions Helpdesk offers a wide range of services to facilitate the implementation of sanctions requirements, reduce compliance costs and give enterprises the confidence in their fulfilment of EU restrictive measures. EU Sanctions Helpdesk objectives: support for sanctions compliance assessment: To provide personalised support for sanctions compliance assessment by offering one-to-one consultations with a team of experts who will assist in the eligibility assessment of involved parties and transactions;information and resource provision: to develop and publish guides, good practices, success stories, news and other informative materials to raise awareness on sanctions. Provide a list of EU resources including tools, guidelines, and methodologies for sanctions compliance;organising of trainings and events: regularly organise and also participate in trainings, conferences and seminars to raise awareness and help enterprises to understand EU sanctions requirements and their implementation. Why choose the EU Sanctions Helpdesk? The EU Sanctions Helpdesk offers a free, personalised, and practical approach to help SMEs not only to comply with sanctions, but also operate safely in international markets. In addition, the EU Sanctions Helpdesk website provides information on sanctions and compliance requirements affecting over 40 countries, as well as a calendar of events, training and other updates. More information: https://eu-sanctions-compliance-helpdesk.europa.eu/index_en

In the latest episode of the Finance Latvia Association's “Financial Dialogue - the essentials” series “Sanctions and their control in Latvia - what is the reality?” a conversation with Paulis Iļjenkovs, Deputy Head of the Financial Intelligence Unit (FIU). The episode discusses issues such as: How is Latvia coping with sanctions control and the risks of sanctions evasion?What is Latvia's role in the international sanctions system?Should Latvian businesses and financial institutions prepare for stricter conditions? During the conversation, Paulis Iļjenkovs gives an insight into: The FIU’s annual performance since becoming the competent authority in sanctions implementation;The assessment of the frozen funds and assets in Latvia;The increase in criminal proceedings and attempts to circumvent sanctions;The unified approach of EU Member States to sanctions compliance and US/UK sanctions implementation trends. The episode also explains the requirements for financial institutions and businesses to comply with sanctions and discusses the challenges ahead in the sanctions area in 2025. The recording of the Finance Latvia Association's conversation with Paulis Iļjenkovs is available in Latvian language.

The European Commission has issued a high-risk alert for the circumvention of sanctions on plywood, in particular birch plywood, imported from Russia and Belarus. Plywood is an important source of revenue for these countries and European Union (EU) sanctions prohibit the purchase, import or transfer, directly or indirectly, of plywood and other wood products originating in Russia or Belarus, or exported from there. Related services such as brokering and logistics support are also prohibited. The circumvention schemes include Russian and Belarusian producers using third-country companies to relabel and repackage their products in order to conceal their true origin. These companies may provide false documentation and use unreliable logistics routes, which increases the risk of sanctions violations. The European Commission notes that companies importing plywood should pay particular attention to the verification of origin. This applies to initial distributors, intermediaries, and end-users. Such verification is necessary to prevent sanctions violations and to ensure compliance with EU regulations. Important warnings: the plywood is made of birch;the producer/exporter is located in a country with trade links to Russia or Belarus, such as China, Kazakhstan or Turkey;processing operations that are not economically justified;the logistic routes appear illogical. Read more: https://ej.uz/ob72

As of 26 December 2024, persons who sell, supply, transfer or export goods included in the list of high priority items must take measures to identify the risks associated with the entry of these goods into Russia and implement appropriate policies, controls and procedures to mitigate these risks. Likewise, persons must ensure that these requirements are implemented by companies established outside the European Union that they own or control. The list of common high priority items includes goods and technologies that are important for the development or production of Russian military goods or that have been found in Russian weapons on the battlefield. The list of high priority items is available Annex XL and Annex XLVIII to Council Regulation No 833/2014 of 31 July 2014 concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine1 (Regulation No 833/2014). For goods included in Annex XLVIII to Regulation No 833/2014, the obligation to introduce measures to prevent sanction circumvention comes into force on 26 May 20252. These requirements are specified in Article 12gb(1) of Regulation No 833/2014 and provide that natural persons and legal persons who sell, supply, transfer or export goods included in the list of high priority items must: take appropriate steps, proportionately to their nature and size, to identify and assess the risks of exportation to Russia and exportation for use in Russia for high priority items or technology, and ensure that those risk assessments are documented and kept up-to-date;implement appropriate policies, controls and procedures, proportionately to their nature and size, to mitigate and manage effectively the risks of exportation to Russia and exportation for use in Russia for high priority items or technology, whether those risks were identified at their level or at the level of the Member State or of the Union. The requirements do not apply to persons who sell, supply or transfer items only within the European Union or to partner countries listed in Annex VIII to Regulation No 833/2014. Similar requirements for exporters of high priority items are also specified in Council Regulation (EC) No 765/2006 of 18 May 2006 concerning restrictive measures in view of the situation in Belarus and the involvement of Belarus in the Russian aggression against Ukraine3. A more detailed explanation of the requirements for exporters of high priority items is available in the frequently asked questions document published by the European Commission, available here. Please note that the Financial Intelligence Unit (FIU) is currently developing guidelines for business operators for the implementation of an internal control system, which will, inter alia, explain the measures that exporters of high priority items must implement to identify, manage and mitigate the risks of sanctions circumvention to ensure compliance with the requirements imposed on them. The guidelines will be published on the FIU website. 1The consolidated version is available here: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02014R0833-20241217&qid=1740390623098 2Council Regulation (EU) 2025/395 of 24 February 2025 amending Regulation (EU) No 833/2014 concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine; available here: https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=OJ:L_202500395 3The consolidated version is available here: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02006R0765-20241216&qid=1740396235868