Latvia (LV)

Latvijas Banka has operated as the sole licensing and supervisory authority for payment institutions, electronic money institutions, crypto-asset service providers and credit institutions in Latvia since the full integration of the former Financial and Capital Market Commission's functions on 1 January 2023.

The Law on Payment Services and Electronic Money mandates safeguarding of PI and EMI customer funds under Section 38, via segregation in an EU credit institution or an equivalent insurance or guarantee, with daily reconciliation and annual external audit of safeguarding compliance; lending or investment of client funds is prohibited.

The Law on Crypto-asset Services transposed MiCA into Latvian law effective 30 June 2024, designating Latvijas Banka as sole competent authority and CASP supervisor, among the earliest such regimes operationalised in the EU.

The Digital Operational Resilience Act has been directly applicable in Latvia since 17 January 2025, and Latvijas Banka now receives major ICT-incident reports directly from supervised entities rather than via the European Central Bank.

Latvia holds full SEPA membership across SCT, SCT Inst and SDD schemes as one of 27 participating EU member states, and Latvijas Banka's EKS system now provides non-bank payment and electronic money institutions with direct SEPA-connected clearing and instant-payment access, described in sourcing as a first-in-the-EU arrangement, alongside a Verification of Payee service that became mandatory in October 2025.

Latvijas Banka's EKS system operates instant-payment and bulk clearing services alongside a Proxy Registry linking phone numbers to IBAN and beneficiary name.

Latvia's banking sector remains concentrated around three ECB-significant institutions, Swedbank, SEB and Citadele, alongside a Luminor branch, eight ECB-listed less-significant institutions and twenty-five small credit unions.

ABLV Bank was named by FinCEN in February 2018 as an institution of primary money-laundering concern under a Section 311 finding, triggering an ECB failing-or-likely-to-fail determination, licence withdrawal in July 2018 and self-liquidation; FinCEN withdrew the designation on 27 September 2024 following the bank's supervised liquidation process, though a 2022 Latvian criminal indictment against former senior officials remains separately noted.

Latvia's merchant-acquiring market operates within the harmonised EU Interchange Fee Regulation and PSD2 framework rather than a distinct national acquiring statute, with commercial gateway and acquirer providers serving both standard and high-risk-MCC merchants subject to standard PCI DSS, KYC and EU-presence onboarding requirements.

Latvijas Banka operates an Innovation Hub, a MiCA- and DORA-aware Regulatory Sandbox, and the ZibLab instant-payments integration sandbox, underpinning a government Fintech Strategy targeting a one-third increase in licensed fintechs against 2025 levels.

Latvia's Verification of Payee service processed 57.4 million verification requests between October 2025 and February 2026, with 68% of the population reporting awareness of the feature and half reporting it prevented an incorrect transfer; Latvijas Banka is one of only two euro-area central banks offering this service directly to payment service providers.

This module carries Sentinel-fed intelligence on Latvia's AML/CFT standing rather than original WPM analysis.

Latvia's three ECB-significant banks operate within the Eurosystem correspondent central banking model and Single Supervisory Mechanism collateral framework.

Latvian payments firm Paynt acquired Canadian payments firm E-xact Transactions in June 2025, marking a strategic North American expansion; deal value was not publicly disclosed.