In Part 1 of our interview with Latvian financial intelligence expert Ilze Znotina, she covered in detail the need for training regarding Anti-Money Laundering / Countering the Funding of Terrorism (AML/CFT) legislation, and in particular why there needs to be a focus on training government officials in how to fight money laundering. She also laid out how Latvia came to the forefront of AML.

In Part II, Ms. Znotina talks about what is needed to create an effective AML/CFT education system, why it is important to do so, and what organisations can put the training systems together.

Nataliia Forsiuk: Ilze, you’ve mentioned several times that the system which Ukraine is looking to develop is in a way a bespoke platform. What kind of challenges do you foresee in the implementation of such a system? Also, what opportunities do you think the implementation of such a system can give Ukraine and how would the Latvian experience be useful for Ukraine?

Ilze Znotina: Certainly, I'd be delighted to delve deeper into this. Ukraine's endeavour to establish a unique and comprehensive system presents both challenges and opportunities. Drawing from my experience in Latvia and from assessments I've conducted in other countries, I can shed light on the critical factors.

First and foremost, the cornerstone of success is political will. It is a lesson learned not only from Latvia but from various nations that have embarked on AML/CFT system transformations. Political will must be a high-ranking priority. Political leaders and other influential figures need to grasp the immense value of a training and certification system. Their active support is indispensable, both in terms of psychological endorsement and financial investment.

In Latvia, when we faced a significant crisis and received a negative Moneyval assessment on our AML/CFT system, it was our government, led by the Prime Minister, that threw its weight behind the initiatives presented by my working group. They offered not just moral support but also allocated a budget, with additional funding secured from external donors. This underscores the pivotal role of political will in driving such initiatives forward.

The political dividends of such a system are substantial. It can play a pivotal role in Ukraine's reconstruction efforts, fostering trust among international donors and partner governments. Ukraine can position itself as a reliable partner committed to combating illicit finance and financial crimes. This, in turn, can attract much-needed funding for the country's recovery.

Furthermore, the system is not solely about enhancing financial security; it also aims to bring about a cultural shift and transform the mindset of those who undergo training. It is an essential step towards ensuring that Ukraine does not continue to be plagued by historical money laundering and financial crimes. For politicians, understanding that well-trained stakeholders in both the Preventive and Enforcement sides, spanning both the private and public sectors, can fortify Ukraine's position and garner support for rebuilding is of paramount importance.

In addition to political will, trustful collaboration stands as another critical factor. All stakeholders, irrespective of their sector, must grasp the system's benefits and demonstrate unwavering dedication. Sabotage or dissenting voices must be set aside in favour of open dialogue and collaboration. Innovation lies in creating a platform that fosters cooperation among diverse stakeholders, building trust through mutual understanding.

To summarise, political will and trustful collaboration are the linchpins of successful system implementation. Combined with the right expertise, these factors will not only enhance Ukraine's financial security but also provide a solid foundation for the country's future.

Nataliia Forsiuk: Great. You’ve mentioned established organisations specialising in the training and certification process. What are these types of organisations and how can Ukraine work with them?

Ilze Znotina: Absolutely, let's delve into these organisations specialised in training and certification, and how Ukraine can foster collaboration with them.

There are several service providers in this domain, primarily focusing on training and certifying the private sector, but some also extending their services to the public sector. While they cater to both sectors, their primary orientation is often towards the private sector. These organisations offer certification programs encompassing various aspects of AML/CFT.

Two globally recognized organisations in this field are ACAMS (Association of Certified Anti-Money Laundering Specialists) and ICA (International Compliance Association). ACAMS has a somewhat more US-centric focus, whereas ICA leans towards a European orientation. Both have garnered international recognition, with hundreds of thousands of certificate holders worldwide.

In my assessment report, I've outlined a variety of service providers offering programs related to AML/CFT. These encompass offerings tailored for both the public and private sectors. However, it's important to consider factors like cost and alignment with Ukraine's specific needs when contemplating engagement with these organisations.

Engaging with well-established entities like ACAMS or ICA can be costly. They typically charge over a thousand euros for certification, and there are also recurring recertification fees. Given Ukraine's ambitious goal to train and certify all stakeholders, this approach might not be the most cost-effective or tailor-made solution.

Instead, I propose exploring newer and less-established service providers. These organisations often offer more contemporary syllabuses and are generally more cost-effective. Crucially, they are open to adapting their content to Ukraine's unique requirements. Engaging with such providers can result in a more customised and domestically focused training and certification system.

Additionally, non-governmental organisations (NGOs) and international organisations also provide training. Organisations like UNODC, EGMONT’s ECOFEL, and the Basel Institute of Governance offer training for public sector stakeholders. The European Banking Authority is also considering offering training for supervisors and potentially some others.

In summary, while well-established organisations like ACAMS and ICA enjoy a strong reputation, engaging with them may entail higher costs and may not perfectly align with Ukraine's needs. Exploring newer, adaptable service providers, and considering offerings from NGOs and international organisations, could offer a more suitable and cost-effective solution for Ukraine's national certification system.

Nataliia Forsiuk: Why do we need to do this in the middle of a war? Couldn’t we just make it part of the post-war reconstruction?

Ilze Znotina: The reason I wanted to be part of this project is precisely due to its potential to be a key driver for garnering trust and support from other countries during these challenging times. Allow me to be candid: Ukraine's international image before the war was marred by significant issues, such as rampant corruption, high-profile scandals involving illicit funds, and the misappropriation of funds meant for the Ukrainian people.

These funds often found their way to luxurious lifestyles in locations like the UK, Switzerland, Spain, or the southern regions of France.

To establish a training system and gain the trust of other nations, particularly those that may offer financial assistance for Ukraine's post-war recovery, is crucial. While certification may hold value in terms of a country's reputation, the true essence lies in maintaining a high level of expertise and knowledge. It is through training that Ukraine can demonstrate its commitment to preventing such thefts from recurring.

The importance of this system, not only from a national but also from an international perspective, cannot be overstated. Ukraine must strive to develop this training system as swiftly as possible because, despite our fervent hope for Ukraine's swift victory in the war, we must also prepare for the challenges that lie ahead.

Questions arise: How will Ukraine be rebuilt? How can we ensure that the money received from other countries is used wisely for Ukraine's prosperity and security, rather than being abused by potential criminals seeking to exploit the system?

Nataliia Forsiuk: What changes have other countries experienced as they developed this system? What kinds of gains are there to be had?

Ilze Znotina: Certainly, I can offer insights primarily from Latvia, where I have the most extensive knowledge. I've also observed developments in other countries, like Malta, where I participated in various awareness-raising events and saw first-hand how they responded after being grey listed by FATF.

In Latvia, the transformation began with our accession to the OECD in 2015. We had to address this organisation's serious concerns regarding our AML/CFT system during the time when I led the National Banking Sectoral Risk Assessment in 2016, followed by drafting the National Risk Assessments in 2017. It was during this period that I first engaged with stakeholders deeply involved in AML/CFT systems.

It became evident that many of them lacked a comprehensive understanding of what was expected, not only in terms of legislation but also in grasping the fundamental elements of AML/CFT.

Essential concepts such as 'Know Your Customer,' due diligence, and reporting suspicious activities were not fully comprehended. Recognizing these gaps, we embarked on an intensive training drive starting in 2018. These sessions were designed to bring together stakeholders from both the private and public sectors, fostering a collaborative environment. Additionally, we established a public-private partnership, a model that aligns with my suggestion that an effective training and certification system should involve such partnerships.

Over the years, with rigorous training, heated discussions, and constructive self-assessment, we have witnessed a remarkable transformation. Our professionals, spanning various sectors like banking, FIU, and law enforcement, have evolved into some of the best-trained experts worldwide. They now possess the knowledge to answer questions, address concerns, and handle cases effectively.

This transformation is not confined to theoretical knowledge alone. Latvia has achieved concrete results, freezing, and seizing potentially illicit funds amounting to billions of euros. The country has initiated hundreds of criminal cases against money launderers and confiscated hundreds of millions, either repatriated to victim countries or contributing to the state budget. This demonstrates our effectiveness in investigations.

Today, Latvia has restored its reputation as a trusted partner on the international stage. Our experts are sought after by other countries, eager to learn from our experiences. This transformation has enabled us to contribute to global security, creating a safer world by establishing systems that prevent financial crimes.

In essence, by bridging the gap between technical, dry professional and common language through training and collaboration, we have not only made our nation more secure but also set an example for others to follow. This synergy among diverse stakeholders fosters a more secure world, ultimately safeguarding our national independence.

This publication was funded  by the European Union. Its contents are the sole responsibility of  the autor and do not necessarily reflect the views of the European Union.