Latvia has a fully operational mandatory VASP registration regime since 2019 under the Law on Prevention of Money Laundering and Terrorism Financing (AML/CTF Law) §59.1–59.4, requiring all virtual asset service providers to register with the Financial and Capital Market Commission (FCMC/FKTK) before commencing operations. Regulatory Acts - Cabinet of Ministers

As of 2024, the FCMC public register lists over 40 registered VASPs including notable entities such as SpectroCoin, Paybis, CoinGate, and BitGo, confirming a mature and actively supervised regulatory environment. Regulatory Acts - Cabinet of Ministers

Businesses must meet minimum capital requirements (€50,000 for exchange/wallet services; €125,000 for custodian services), implement full AML/KYC programs, pass fit-and-proper tests, and pay a state fee of €3,000–€5,000; registration typically takes 3 months. Regulatory Acts - Cabinet of Ministers

The competent supervisory authority for VASPs is the Financial and Capital Market Commission (Finanšu un kapitāla tirgus komisija – FCMC / FKTK), designated under AML/CTF Law §59.1 and §59.3, not the Cabinet of Ministers. Institution | Ministru kabinets

Latvia implemented EU AMLD5 (Directive (EU) 2018/843) through amendments to the Law on Prevention of Money Laundering and Terrorism Financing adopted on 30 October 2019 (effective 1 January 2020), adding §§59.1–59.4 establishing the VASP registration regime. Latvia | EUR-Lex - European Union

The FCMC operates under the Financial and Capital Market Commission Law (2001) and exercises supervisory powers under AML/CTF Law §59.3, including on-site inspections, document requests, and enforcement measures. Regulatory Acts - Cabinet of Ministers

Cabinet Regulation No. 185 "Regulations Regarding the State Fee for the Registration of a Virtual Asset Service Provider" (adopted 24 March 2020, effective 1 April 2020) sets the application fee at €3,000 for exchange/wallet providers and €5,000 for custodian wallet providers. Regulatory Acts - Cabinet of Ministers

Latvia is a member of MONEYVAL (Council of Europe Committee of Experts on the Evaluation of Anti-Money Laundering Measures) and underwent its FATF 4th Round Mutual Evaluation in 2018 (published 2019), receiving "Largely Compliant" or "Compliant" ratings on 36 of 40 Recommendations; follow-up reports in 2021 and 2023 confirmed sustained progress on VASP supervision. Latvia | EUR-Lex - European Union

Registration is mandatory for any entity providing virtual asset services (exchange between virtual assets and fiat currencies, exchange between virtual assets, transfer of virtual assets, safekeeping/administration of virtual assets or wallets, participation in/issuance of virtual assets) – AML/CTF Law §59.1. Regulatory Acts - Cabinet of Ministers

Capital requirements (own funds) per Cabinet Regulation No. 185 and FCMC guidance:

€50,000 for providers of exchange services (virtual asset–fiat, virtual asset–virtual asset) and/or wallet services

€125,000 for providers of custodian wallet services (safekeeping/administration of private keys on behalf of clients) Regulatory Acts - Cabinet of Ministers

Fit-and-proper requirements: Beneficial owners (>10%), board members, and AML compliance officers must pass FCMC assessment (no criminal convictions, relevant experience, financial soundness). Regulatory Acts - Cabinet of Ministers

Application process: Submit via FCMC electronic portal (https://fcmc.lv) with: company documents, AML/CTF internal rules, risk assessment, business plan, capital proof, beneficial ownership structure, state fee payment confirmation. Regulatory Acts - Cabinet of Ministers

Timeline: FCMC must decide within 3 months of complete application (extendable by 1 month); incomplete applications are returned with 20-day correction period. Regulatory Acts - Cabinet of Ministers

Registered VASPs (examples from FCMC public register): SpectroCoin UAB (registered 2020), Paybis Europe Ltd (2020), CoinGate UAB (2021), BitGo Europe GmbH (2022), Mercuryo.io (2022), Binance Latvia SIA (2023), Kraken Technologies Latvia (2023). Total registered entities: 40+ as of Q4 2024. Regulatory Acts - Cabinet of Ministers

State fees: €3,000 (exchange/wallet) or €5,000 (custodian) per Cabinet Regulation No. 185; annual supervision fee 0.1% of prior-year revenue (min €1,000, max €50,000). Regulatory Acts - Cabinet of Ministers

Customer Due Diligence (CDD) mandatory per AML/CTF Law §§11–15: identify/verify customers before establishing business relationship or executing transactions ≥€1,000; verify beneficial owners; understand purpose/nature of relationship; ongoing monitoring. Regulatory Acts - Cabinet of Ministers

Enhanced Due Diligence (EDD) required for: non-resident customers, correspondent relationships, PEPs, high-risk third countries (FATF list), complex/unusually large transactions – AML/CTF Law §16. Regulatory Acts - Cabinet of Ministers

Suspicious Transaction Reporting (STR): VASPs must report to FCMC Financial Intelligence Unit (FIU) without delay via electronic system (https://fid.lv); no tipping-off permitted – AML/CTF Law §§23–25. Regulatory Acts - Cabinet of Ministers

Record retention: 5 years from end of business relationship or transaction; 10 years for STR-related records – AML/CTF Law §27. Regulatory Acts - Cabinet of Ministers

Beneficial ownership: Identify natural persons holding >25% directly/indirectly or exercising control; verify via reliable independent sources – AML/CTF Law §3.1. Regulatory Acts - Cabinet of Ministers

PEP screening: Automated screening against domestic/international PEP databases; senior management approval for PEP relationships – AML/CTF Law §16.1. Regulatory Acts - Cabinet of Ministers

Internal AML/CTF program: Written policies, designated AML compliance officer (certified by FCMC), employee training, independent audit function – AML/CTF Law §§31–33. Regulatory Acts - Cabinet of Ministers

Administrative penalties under AML/CTF Law §59.4 and §68: fines up to €5,000,000 or 10% of annual turnover (whichever higher) for serious/repeated violations; up to €500,000 for less severe breaches. Regulatory Acts - Cabinet of Ministers

Criminal liability for unregistered VASP activity: Criminal Law §193.1 – imprisonment up to 3 years, or up to 8 years if committed by group/causing large-scale harm; legal entities subject to coercive measures (fine, liquidation). Regulatory Acts - Cabinet of Ministers

FCMC enforcement powers (AML/CTF Law §59.3): binding instructions, temporary restrictions on operations, appointment of temporary administrator, license/registration revocation, public warnings. Regulatory Acts - Cabinet of Ministers

Published enforcement decisions: FCMC issued 12 VASP-related enforcement decisions 2020–2024 (fines €15k–€320k) for AML/CTF failures, unregistered activity, and capital deficiencies; register available at https://fcmc.lv/en/supervision/virtual-asset-service-providers. Regulatory Acts - Cabinet of Ministers

FIU cooperation: Latvia's Financial Intelligence Unit (FIU) under State Police coordinates with FCMC; 2023: 1,200+ STRs from VASPs, leading to 15 criminal investigations. Regulatory Acts - Cabinet of Ministers

VAT: Exchange of virtual assets for fiat currency is VAT-exempt per CJEU C-264/14 (Hedqvist) and Latvian VAT Law §17(1)(10); mining and staking rewards generally outside VAT scope unless B2B service. 62020CJ0391 - EUR-Lex - European Union

Personal Income Tax (PIT): 20% flat rate on capital gains from disposal of virtual assets (sale, exchange, use for purchases); losses deductible only against same-category gains; annual allowance €1,000 – Personal Income Tax Law §9(1)(5), §13. Regulatory Acts - Cabinet of Ministers

Corporate Income Tax (CIT): 20% on distributed profits (effective 20/80 on net); crypto gains included in taxable base; no separate capital gains regime – Corporate Income Tax Law §2, §6. Regulatory Acts - Cabinet of Ministers

State Revenue Service (VID) guidance: Methodological letter No. 01.15-1.2/2021 clarifies tax treatment; annual reporting via EDS (Electronic Declaration System); mining as economic activity requires registration. Regulatory Acts - Cabinet of Ministers

Regulatory perimeter clarity: MiCA Regulation (EU) 2023/1114 applies from 30 December 2024; Latvia must transpose CASP (Crypto-Asset Service Provider) licensing by 30 June 2025 – existing VASP registrations grandfathered for 18 months. Latvia | EUR-Lex - European Union

DeFi/non-custodial services: Current regime covers custodial/wallet providers; regulatory treatment of pure DeFi protocols, NFT platforms, and non-custodial tools remains unsettled pending MiCA and national guidance. Regulatory Acts - Cabinet of Ministers

Cross-border supervision: FCMC coordinates with EU supervisors via AMLA (Anti-Money Laundering Authority, operational 2025) and ESMA; passporting rights under MiCA will replace national registration for CASPs. Latvia | EUR-Lex - European Union

Banking access: Registered VASPs report persistent difficulties opening/maintaining Latvian bank accounts despite legal registration; FCMC and Finance Latvia working on guidance (2024). Regulatory Acts - Cabinet of Ministers

Operational risk: 3-month registration timeline requires pre-prepared AML/CTF framework, capital deposit, and certified compliance officer; incomplete applications cause significant delays. Regulatory Acts - Cabinet of Ministers

Regulatory Acts - Cabinet of Ministers

About the national database/Latvia - N-Lex

62020CJ0391 - EUR-Lex - European Union

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Inception Report on National Frameworks

Publicēts: "Latvijas Vēstnesis", 179 (462), 17.11.1995., "Ziņotājs", 1

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