FIU Latvia: Latvia outside the high-risk zone in the global context of environmental crime

Environmental crime is among the most profitable and fastest-growing types of crime globally. According to the findings of the Financial Action Task Force (FATF) and estimates by the International Criminal Police Organization (INTERPOL), the volume of illicit proceeds generated annually by environmental crime may have exceeded EUR 300 billion in 2025.

Such criminal activities often have a cross-border nature – illegal extraction of natural resources may take place in one country, while processing, trade, and final consumption occur in other countries or even on different continents.

As a result, illicit proceeds frequently enter financial systems of jurisdictions that are not directly linked to the location where the criminal offence was committed. Given the number of countries involved and their differing political and economic circumstances, timely information exchange may be hindered, which in turn complicates the identification and disruption of illicit financial flows.

Latvia’s money laundering risk profile in the context of environmental crime

Taking into account international risks, FIU Latvia has developed a risk assessment entitled “Noziedzīgi iegūtu līdzekļu legalizācijas riski saistībā ar noziegumiem pret vidi”(available only in Latvian). The study concludes that money laundering risks in Latvia associated with proceeds generated by environmental crimes committed both domestically and abroad are not high.

At the same time, the assessment identifies potential threats and vulnerabilities characteristic of Latvia’s money laundering risk profile. The analysis examines the most significant types of environmental crime, taking into account Latvia’s economic and geographical specificities, historical crime trends, as well as the conclusions of FATF and other international institutions.

The analysis confirms that Latvia is not considered a high-risk jurisdiction for money laundering related to environmental crimes committed abroad.

In Latvia, the most commonly encountered environmental criminal offences are:

• illegal logging (Section 109 of the Criminal Law);
• unlawful activities violating regulations governing the management and use of land, subsoil, water resources, and forests (Section 96 of the Criminal Law);
• violations of waste management regulations (Section 99 of the Criminal Law).

Organised crime risks and supervisory mechanisms

Although the activities of organised crime groups cannot be entirely ruled out beyond the visibility of competent authorities in Latvia, existing supervisory and control mechanisms significantly limit the scope for large-scale illegal activities, particularly in the fields of natural resource extraction and forestry.

The highest risk of organised crime involvement in Latvia has been identified in the waste management sector, especially in cases involving illegal cross-border waste shipments. In such schemes, organised crime groups primarily provide professional support and intermediary services to licensed companies.

Shadow economy factors and financial flows

The assessment concludes that all analysed sectors are closely linked to areas of the economy with a relatively high prevalence of the shadow economy, including construction, wood processing, and manufacturing. Key risk factors identified include extensive use of cash, the involvement of foreign payment and electronic money institutions, and complex cross-border financial flows.

Based on the analysis of suspicious transaction reports received by FIU Latvia, construction, transport, and forestry companies regularly appear in such reports, particularly in connection with potential tax-related offences and corruption.

Typologies in the waste management sector

Concerning environmental crimes in the waste management sector, particularly cross-border shipments, FIU Latvia highlights several characteristic indicators in addition to previously identified money laundering typologies, including:

• frequent use of cash or rapid movement of funds across multiple national borders;
• payments to high-risk jurisdictions, including regions in the Balkans, Africa, South Asia, Southeast Asia, and Latin America;
• newly established, short-lived companies that suddenly engage in large-scale waste or scrap metal transactions;
• companies whose beneficial owners or management lack prior experience in waste management, processing, or logistics.

The FIU Latvia risk assessment confirms that, while money laundering risks related to environmental crime in Latvia are currently not high, this area remains a significant international challenge. In light of the global growth in environmental crime, timely risk identification, inter-institutional cooperation, and awareness within the financial sector will continue to be essential prerequisites for the effective prevention of money laundering and the protection of the financial system.