IMF launch Regional Nordic-Baltic Technical Assistance Report on “Financial Flows Analysis, AML/CFT Supervision, and Financial Stability”

“The financial market systems of the Nordic-Baltic countries are closely interlinked, therefore it is crucial to actively cooperate in identifying and managing risks at the regional level. This unique project has allowed to assess the points of contact and strengthen the resilience of the region,” says Simonas Krėpšta, Member of the Board of the Bank of Lithuania.

“AML/CFT issues in Lithuania form an integral part of the political agenda in the financial sector. As the picture of risks constantly changes, their effective management model requires constant reflection, efficiency and effective cooperation between the responsible authorities. The IMF Report and the recommendations presented will contribute to the further strengthening of the AML/CFT framework in the Nordic-Baltic region,” says Mindaugas Liutvinskas, Vice-Minister of Finance.

In a first-of-its-kind technical assistance project on Anti-Money Laundering, Lithuania partnered with the IMF and Denmark, Estonia, Finland, Iceland, Latvia, Norway and Sweden to continue enhancing the effectiveness of the AML/CFT frameworks at the country and regional level. The IMF used machine learning technology, on a country specific and regional level, to better understand cross-border money laundering risks, analyzed the sensitivity of AML/CFT supervisory tools to respond to these risks and developed recommendations to increase their effectiveness, and explored quantifying the impact of money laundering shocks on financial stability. 

The Report notes that continuous efforts to strengthen AML/CFT frameworks is a clear priority in the Region and that coordinated action and innovative solutions are key in keeping pace with evolving financial integrity risks. More specifically, it recommends the ongoing monitoring of cross-border flows, with regional information exchange on macro-trends, and better identification of countries with potential money laundering risks to the Nordic Baltic Region. To bolster AML/CFT risk-based supervision, the Report calls for increased collection of cross-border data and complementary investments in advanced data analytic tools, as well as coordinated supervisory action for the highest risk banks. Finally, it recommends continued analysis of the impact of financial integrity breaches on financial stability to fortify the financial system against money laundering shocks. 

The report published by the IMF highlights Lithuania’s progress in the area of money laundering and terrorist financing which is also viewed positively by other international organisations (e.g. the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism, MONEYVAL). At the same time, it is noted that Lithuania must ensure close cooperation and coordination between institutions when addressing the emerging challenges.

Lithuania welcomes the analysis and outcome of the project and hopes that through publication of this report, the private sector and other countries can take key learnings from the experiences and good practices of the region. Lithuania’s ongoing work is aligned with the recommendations of the IMF report with action already underway on several topics, notably: together with other Nordic-Baltic countries Lithuania is strengthening cooperation between supervisory authorities of financial market participants, thus ensuring further progress in the region in the area of financial sector transparency. In drafting the Report and in discussions with the IMF, Lithuania was represented by experts from the Bank of Lithuania and the Ministry of Finance. 

Lithuania is constantly strengthening AML/CFT measures, the Center of Excellence in Anti-Money Laundering established by the Bank of Lithuania, the Ministry of Finance and commercial banks is working actively, and recommendations, positions and training are provided to financial market participants, in addition to expectations being presented to them.

Nordic-Baltic Regional Report: Technical Assistance Report-Nordic-Baltic Technical Assistance Project Financial Flows Analysis, AML/CFT Supervision, and Financial Stability

IMF: Money Laundering Poses a Risk to Financial Sector Stability

Panel discussion on the IMF report on money laundering in the Nordic-Baltic region

Supervision of financial market participants, International relations, Banks, Credit unions, Payment institutions , Electronic money institutions , AML, International Monetary Fund, anti-money laundering and counter terrorist financing (AML/CTF)