Vitas Vasiliauskas: Anti-money laundering and counter terrorist
financing - from challenges to possibilities
Speech by Mr Vitas Vasiliauskas, Chairman of the Board of the Bank of Lithuania, at the
international conference Anti-Money Laundering and Counter Terrorist Financing: From
Challenges to Possibilities, Vilnius, 1 October 2020.
* * *
Dear market participants, regulators, supervisors, financial intelligence representatives,
A warm welcome to our international conference on Anti-Money Laundering and Counter
Terrorist Financing.
The virtual event hosted by the Bank of Lithuania has been set up together with our partners from
ACAMS Baltics Chapter, FinTech Hub LT and the Association of Lithuanian Banks. I sincerely
thank everyone who has contributed to organising this conference despite the difficult
circumstances.
A number of high-profile European cases of the alleged systematic use of banks for money
laundering have been reported over the last few years. Some of these cases concern the
NordicBaltic jurisdictions. Although no serious breaches have been reported in Lithuania's financial
system, this context affects the whole region, especially in terms of reputational risks. Given the
cross-border effects of such cases on integrity and resilience of domestic banking sectors, we
are in need of close international cooperation - to which this conference will contribute.
Furthermore, important changes are taking place in the financial sector. Novel business models
are reshaping virtually every area of financial products and services. This creates new
opportunities. But the ongoing disruption also poses substantial challenges and can open gaps
in the regulatory perimeter. We thus need to stay alert and constantly search for new ways to
update and improve our frameworks for anti-money laundering (AML) and counter terrorist
financing (CTF). Effective AML/CTF measures can go a long way in preventing and fighting
financial crime.
However, overly tight regulation, zero tolerance for any risk, and the prospect of harsh sanctions
can result in de-risking. This is when financial institutions terminate business relationships with
clients to avoid, rather than manage, risk. One practical example of this is the withdrawal of
correspondent banking relations - a serious issue for the Lithuanian financial sector.
If taken to an extreme, de-risking can result in increased financial exclusion. It may also bring
higher risk transactions out of the regulated system into more opaque, informal channels, and
become even harder to monitor. In other words, de-risking poses an important risk to our
financial systems.
Today's panels on the AML/CTF development and the de-risking dilemma, as well as the related
training sessions, are thus extremely relevant in light of current challenges.
We at the Bank of Lithuania are eager to hear and discuss different perspectives. Our approach
to regulation aims to strike a delicate balance. We set out an objective to be not merely a
watchdog but also a partner to the financial sector, actively facilitating the provision of financial
products and services.
However, this does not mean that we have somehow relaxed our focus on risk prevention and
mitigation. On the contrary, we have substantially boosted human resources devoted to AML
issues, establishing a dedicated unit. We have also enhanced cross-institutional cooperation in
this area.
And we are looking to make a step forward. It is not a coincidence that our first session today
concerns public-private sector partnerships.
The EU is moving forward on this topic, as there are plans for introducing EU-level guidelines on
public-private partnerships as part of the upcoming reform of the EU AML/CTF framework.
Recent money laundering cases clearly show that we are all sitting in the same boat and that
strengthened public-private coordination is in everybody's interest.
Therefore, over the past year public institutions and private entities in Lithuania have been
working towards establishing the Centre of Excellence in Anti-Money Laundering. This platform
will bring major private financial institutions into close dialogue with law enforcement and
supervision entities to detect, disrupt and prevent financial crime.
The Centre constitutes our collective attempt to enhance the current AML/CTF system and base
it on trust and confidence across the public-private sector divide. As international experience
suggests, such public-private partnership arrangements can help in numerous tasks, both at
tactical and strategic levels - from supporting the ongoing law enforcement investigations to
developing financial crime typologies.
I will now pass the floor to Finance Minister Mr. Vilius Šapoka, who will elaborate further on the
topic of public-private partnership in the AML domain. For now, let me just say that I am very
happy to see active cooperation between public and private actors already in effect today. Our
AML conference is, I believe, a great example of how we can all join forces to make progress in
preventing financial crime.
Thank you, and I wish all of us a fruitful and engaging conference.
M o r e :
www.lb.lt/en/speeches-interviews-presentations/speech-of-v-vasiliauskas-on-anti-moneylaundering-and-counter-terrorist-financing