On 12 June 2018, the Cabinet of Ministers approved amendments to the Law On International Sanctions and National Sanctions of the Republic of Latvia (hereafter – Sanctions Law). The draft law specifies the scope of subject of the law, establishes the time of coming into force of national sanctions, provides for taking sanctions into account in public procurement, mandates the need for setting up internal control systems, supplements the list of competent institutions and creates their right to impose penalties for deficiencies in the internal control systems.
Amendments to the Sanctions Law are necessary to address the shortcomings identified during the implementation of the law, to improve transparency of the legislation governing sanctions-related issues, and to bring the Sanctions Law in line with international requirements.
Amendments to the Sanctions Law shall be adopted by the Saeima (the Latvian Parliament), and that is expected by the end of the current parliamentary term.
Significant supplements to the Sanctions Law are planned on the following topics:
the law envisages that from now on, all natural persons and legal entities are under an obligation to comply with and execute sanctions that are in force in Latvia. This consolidates an essential principle in the functioning of the Latvian legal system – the duty of each person to prevent the violation of sanctions. Since the passing of the Sanctions Law, intentional violation of sanctions has been criminalised;
the draft law is to lay down that the national sanctions imposed by the Cabinet on certain persons come into force immediately – on the date that the Prime Minister signs the Cabinet Order containing the list of subjects of sanctions. This is in line with the generally accepted principle that sanctions should take effect without delay, without notifying the subject of sanctions of the adoption thereof in order to prevent the sanctions subject from avoiding enforcement;
the draft law also adds the State Revenues Service (SRS) and the Consumer Rights Protection Centre (CRPC) to the list of competent institutions, stipulating that the said institutions are in charge of control over financial restrictions and restrictions under civil law in regard to persons under their supervision as listed in the draft law;
under the draft law, the persons supervised by the Financial and Capital Market Commission FCMC), the SRS and the CRPS are obliged to carry out, in accordance with the character of their activity, the risk assessment concerning the sanctions, whilst the persons supervised by the FCMC are obliged to establish an internal control system. The duty to set up an internal control system on sanctions will take effect on 1 May 2019 thereby giving time to the supervised persons to make the necessary preparations;
the draft law gives a definition of the internal control system, lays down the right of supervisory institutions to apply administrative sanctions and supervisory measures due to deficiencies in internal control systems, and the right of the supervised institutions to appeal against those decisions. The draft law also provides for a limitation period of ten years applicable to administrative penalties and supervisory measures. The provisions concerning the right of supervisory institutions to apply administrative sanctions and supervisory measures will come into force upon amendments to Section 84 of the Criminal Law, clearly separating between criminal and administrative liability for the violation of regulations governing sanctions. Under the draft law, the FCMC is authorised to issue binding regulations on specific requirements for the establishment of an internal control system, while the SRS and the CRPS are to produce public available guidelines;
the draft law also regulates the application of sanctions in the field of public procurement, imposing an obligation to check whether candidates or tenderers have been targeted by any sanctions, as well as the obligation to provide for in public procurement contracts the right to unilaterally withdraw from the contract, should its implementation be impeded by sanctions imposed during the contract period. This provision will not apply to procurements or procurement procedures launched or announced before the provision takes effect.
The draft law has been prepared by the Ministry of Foreign Affairs in cooperation with the Ministry of Finance, the Ministry of Justice, the Ministry of Transport, the Ministry of the Interior, the Ministry of Environmental Protection and Regional Development, the State Chancellery, the FCMC, the SRS, the CRPS, the Office for Prevention of Laundering of Proceeds Derived from Criminal Activity, and the Association of Latvian Commercial Banks.