Latvian notaries benefited from ENN cooperation and created, with the support of the Italian notariat and the CNUE, the basis to fully guarantee the real estate transactions sector and prevent money laundering
by Giovanni Liotta (coordinator of the European Notarial Network – ENN)
On 5 November Latvian notaries had an important meeting with their President of the Republic, Egils Levits (picture above, on the right), to discuss the development of notarial functions and the potential benefits for the Latvian economy.
The President of the Council of Latvian Notaries, Janis Skrastins (2nd from right), in order to support the instances concerning the enlargement of competences in the real estate sector and the potential effectiveness of AML notarial control, presented to President Levits the results of the economic analysis carried out with the Italian notariat. This study represents the final output following the feedback received by Italian speaker A. Cappiello (Italian ENN interlocutor, pictured below) during the last European Notarial Network seminar on AML (Riga, 26 September 2019).
In fact, after the ENN seminar, Latvian notaries asked the Italian interlocutor and the ENN coordinator for a more in-depth analysis concerning the Latvian notarial role, potential development and benefits in terms of contribution to the economy and increase in AML reports. The following Italian study (carried out by A. Cappiello under the supervision of the CNN international coordinator V. Rubertelli and myself) used some estimation parameters based on the last available Latvian FIU data on STRs by Designated AML Non-Financial Businesses and Professions. From Fig. 1 we can observe an exponential increase (even in the case of a prudential estimate based on a “low-risk” scenario) in STRs where real estate contracts and the related registration in the public registers were required to be carried out by Latvian notaries.
Fig. 1 – Potential number of anti-money laundering reports (STRs) in case of compulsory legal control of the real estate sector by Latvian notaries (Low-Risk scenario)
The matrix in Fig. 2, which takes into account that money launderers are prone to using high-value real estate, shows possible scenarios in which the Latvian AML context could become similar to that of the major EU economies, where notarial AML reports usually represent more than 80% of the STRs made by DNFBPs (Designated Non-Financial Businesses and Professions).
Fig. 2 – Potential number of STRs in case of compulsory legal control of the real estate sector by Latvian notaries (3 possible scenarios)
Moreover, after analysing the main economic-regulatory characteristics of Latvia, the study by the Italian notariat illustrates the main systemic advantages of preventive notarial control and provides some useful hints for the development of the notariat within a sustainable infrastructure framework.
The Latvian notariat expressed its sincere thanks to the ENN and CNN which, with their support, enabled it to implement effective policy action. This cooperation was particularly appreciated by the President of the Latvian Republic who hoped that it would continue in the long term.
The European Notarial Network made possible this effective cooperation decentralising the EU notarial training and directly involving especially newly established notariats of countries that have recently joined the European Union.