Prevention of proliferation
Proliferation involves the production, storage, movement, use or distribution of weapons of mass destruction.
The financing of proliferation is defined as the direct or indirect collection or transfer of financial resources or other property acquired by any form with a view to use them or with the knowledge that these resources will be fully or partly used to fund proliferation.
Unlike terrorism financing, the financing of proliferation largely involves formal sources of funding, such as banks and payment institutions, and not cash, cryptocurrency and other methods used to fund terrorism.
Proliferation and it’s financing is major threat to the security of every country. Measures to combat proliferation include establishing an exports control system, setting regulatory reporting requirements, targeted financial sanctions, as well as other measures that depend on the legal authority of the export controlling institutions. Measures to control the financial sector are particularly important, supplementing, though not replacing, effective exports checks.
The national threat and vulnerability to proliferation financing and circumvention of targeted financial sanctions was assessed in 2017–2018 as ‘medium-high’. In general, the proliferation financing risk can also be rated as ‘medium-high’.
The following factors give rise to the threat of proliferation financing:
- Latvia is located on a transit road from east to west and on an outer border of the EU. There is a possibility of strategic goods being moved through Latvia to countries running a risk of terrorism, or countries that are subject to sanctions.
- Proliferation financing might be exercised by persons or organisations that are not included in the lists of sanctions when conducting transactions on behalf of another person which is included in a list of sanctions.
The following main proliferation financing risks have been identified:
- The risk that Latvia may be used as a transit country for the strategic deliveries to countries that are subject to sanctions, to countries with a risk of terrorism, or to terrorist groups.
- Use of the Latvian financial system for making suspicious transfers as a stage of complex transaction chains for circumvention of the international sanctions.