RESEARCH: Latvia cryptocurrency and digital asset sanctions regulatory requirements

# RESEARCH: Latvia Cryptocurrency and Digital Asset Sanctions Regulatory Requirements

Executive Summary

Cryptocurrency activities in Latvia are subject to strict compliance with international and national sanctions regimes. The Financial Intelligence Unit (FIU) of Latvia is the sole competent authority for implementing both international and national sanctions, effective as of April 1, 2024. All persons—natural or legal—are obligated under Article 2, Clause 2 of the Law on International and National Sanctions to comply with these measures. Licensing is not a prerequisite for most crypto-related activities; however, entities involved in targeted financial transactions must ensure they do not deal with sanctioned individuals or entities. No specific cryptocurrency licenses are issued by Latvian authorities, but firms must adhere to anti-money laundering (AML) and sanctions compliance requirements. The practical reality involves rigorous due diligence, ongoing monitoring, and reporting of suspicious activities to the FIU.

Regulatory Framework

• Regulatory Bodies:

  • Financial Intelligence Unit of Latvia (FIU), acronym: FID, website: https://sankcijas.fid.gov.lv/en/faq
  • Ministry of Foreign Affairs (MFA), website: https://www.mfa.gov.lv/en/sanctions

• Primary Laws:

  • Law on International Sanctions and National Sanctions (Sanctions Law), enacted 2021, revised 2025; official gazette: https://www.mfa.gov.lv/en/sanctions
  • Law on the Prevention of Money Laundering and Terrorism Financing, applicable to crypto activities.

• International Standing:
  Latvia aligns with EU sanctions policies under FATF/MONEYVAL standards. The country participates in the EU Common Foreign and Security Policy (CFSP) for sanctions implementation. MONEYVAL’s 6th round evaluation is slated for completion by year-end 2025, affirming Latvia's compliance framework. Latvia

Licensing Requirements

• Who Needs a License: No specific license is required for cryptocurrency exchanges or wallet providers in Latvia; however, any entity engaged in targeted financial services must comply with sanctions obligations.
• Activities Requiring Licensing: Targeted financial transactions (e.g., transfers to sanctioned persons/entities).
• Capital Requirements: N/A – compliance is based on adherence to regulations rather than capital thresholds.
• Application Process & Timeline: No formal licensing process; entities must register with the FIU for reporting purposes and conduct internal controls as recommended by the MFA. Sanctions | Ārlietu ministrija
• Structural Requirements: Internal control systems are advised but not mandated unless dealing directly with sanctioned persons/entities.
• Entities Licensed/Operational: No distinct crypto-specific licenses exist; compliance is enforced through existing financial services licensing regimes.

AML/KYC Requirements

• CDD & EDD: Conduct customer due diligence (CDD) and enhanced due diligence (EDD) for high-risk customers, including crypto service providers.
• STR Reporting: Report suspicious transaction reports (STRs) to the FIU within 5 days of detection.
• Record Retention: Maintain records for at least five years as per AML/CFT regulations.
• Beneficial Ownership & PEP Screening: Identify and verify beneficial owners; screen against Politically Exposed Persons (PEPs). Money laundering, terrorism and

Enforcement Actions

• Penalties: Administrative fines up to €5,000,000 for violations; criminal liability (up to 8 years imprisonment) under Article 84 of the Criminal Law for sanctions breaches. FIU Management meeting with President of Latvia E. Rinkēvičs
• Recent Cases: FIU reported over 5,500 suspicious transaction reports and nearly 100,000 threshold declarations in 2025, highlighting active enforcement.

Tax Treatment

No specific tax guidance exists for virtual assets under Latvian law; crypto gains are generally treated as ordinary income or capital gains based on the nature of the asset and transaction. Republic of Latvia: Detailed Assessment Report on Anti-Money...

Key Gaps & Risks

• Regulatory Gaps: Lack of explicit crypto-specific licensing, though FIU guidance suggests compliance through existing financial services frameworks.
• Implementation Risks: High risk of circumvention due to the global nature of cryptocurrencies; reliance on robust internal controls and ongoing monitoring is critical.
• Practical Reality vs. Paper Law: While laws mandate sanctions compliance, practical enforcement depends heavily on industry self-regulation and cooperation with FIU.

Sources

• Sanctions | Ārlietu ministrija
• Money laundering, terrorism and
• Latvia
• Finanšu izlūkošanas dienests
• FIU Management meeting with President of Latvia E. Rinkēvičs
• Latvia
• Cooperation as the foundation of a secure financial system: FIU Latvia...
• Sanctions | Ārlietu ministrija
• Financial_Sector_Update_No_19
• Latvia
• Microsoft Word - Cover sanctions.docx

Claims:

• Cryptocurrency activities in Latvia are fully subject to EU and national sanctions regimes, with the FIU as the implementation authority. Sanctions | Ārlietu ministrija
• All persons must comply with sanctions under Article 2, Clause 2 of the Sanctions Law. Finanšu izlūkošanas dienests
• No specific cryptocurrency licenses are issued; compliance is enforced through AML/CFT frameworks and internal controls. Money laundering, terrorism and
• The FIU is the competent authority for sanctions implementation, effective from April 1 2024. FIU Management meeting with President of Latvia E. Rinkēvičs
• Latvia’s AML/CFT system is internationally recognized as effective, per MONEYVAL evaluation. Latvia