Latvia’s financial sector has increasingly become an attractive destination for foreign investors and international businesses, thanks to its strategic geographic position, stable macroeconomic environment, and commitment to adopting international best practices. As a member of the European Union and the Eurozone, Latvia has integrated its financial system with those of other European countries, providing seamless access to the broader European market. Additionally, the country’s well-developed infrastructure, skilled workforce, and competitive tax regime make it an appealing choice for businesses seeking to establish a presence in the Baltic region. The financial sector in Latvia comprises a variety of services, including banking, insurance, capital markets, and fintech, all of which contribute to the overall growth and diversification of the national economy.

To ensure the stability, transparency, and integrity of its financial sector, Latvia has implemented a robust regulatory framework that adheres to both European Union directives and domestic legislation. This framework is designed to promote fair competition, protect the interests of consumers and investors, and mitigate systemic risks that could compromise financial stability. In addition to complying with EU-wide regulations, Latvia has adopted specific measures to address unique challenges and vulnerabilities within its financial system, such as combating money laundering and terrorist financing. The Latvian financial regulatory system emphasizes the importance of cooperation and information sharing among domestic supervisory authorities, as well as between Latvian regulators and their international counterparts.

The principal financial regulators in Latvia and their primary responsibilities are as follows:

Latvijas Banka (Bank of Latvia): As the country’s central bank, the Bank of Latvia is responsible for maintaining financial stability, implementing monetary policy, and managing Latvia’s foreign exchange reserves. It also supervises payment systems and provides support to other financial regulators in the country.

Finanšu un kapitāla tirgus komisija (FKTK, Financial and Capital Market Commission): The FKTK is the main regulatory body for Latvia’s financial and capital markets, overseeing the banking, insurance, pension fund, and securities sectors. Its primary duties include licensing and supervising financial institutions, enforcing compliance with relevant laws and regulations, and promoting transparency and fair competition within the financial sector.

Latvijas Finanšu noziedzības izmeklēšanas birojs (FID, Financial Intelligence Unit of Latvia): The FID is responsible for combating money laundering, terrorist financing, and other forms of financial crime. It collects, analyzes, and disseminates financial intelligence to domestic and international partners, working closely with law enforcement agencies and other supervisory authorities.

Latvijas Elektronisko sakaru direkcija (Electronic Communications Office of Latvia): Although not a direct financial regulator, this authority plays a significant role in regulating the electronic communications market, which impacts the broader financial sector. Its responsibilities include supervising digital services providers, including financial technology (fintech) companies, to ensure compliance with relevant regulations and protect consumer interests.