Using extraterritorial sanctions in the fight against financial crime in Latvia: From silver lining to over compliance

The first section of this chapter focuses on how the largest locally-owned Latvian bank was forced into liquidation within less than a month due to alleged violations of sanctions imposed by the US against North Korea. This case is a prime example of extraterritorial reach of the US sanctions. However, a case can be made that for Latvia it also contributed to the fight against financial crime to a certain extent. The second section focuses on the consequent amendments to the sanctions legislation in Latvia. The respective amendments legitimized the extraterritorial reach of foreign unilateral sanctions, yet in a limited way. The reasons for doing so are predominantly rooted in the need to safeguard financial stability and provide legal certainty to the private actors. The third section focuses on potential overcompliance with unilateral sanctions by private actors and other legal issues emerging from application of unilateral extraterritorial sanctions in practice.