The Ministry of Finance Changed Its Mind and Withdrew the Plan to Strengthen Control over Cash Transactions 0 12

The Ministry of Finance explained that the rules regarding the procedure and content of reporting suspicious transactions and threshold declarations received significant objections during public discussions, therefore the corresponding draft resolution of the Cabinet of Ministers has lost its relevance.

Last summer, several parties opposed the planned changes. In particular, on August 19 of last year, a rally titled "A Clear Conversation about Cash and Freedom" was held at the Esplanade, organized by the conservative thought conference "Demos," which was attended by many politicians.

Previously, the Ministry of Finance asserted that the planned changes in cash regulation would not affect honest taxpayers.

The ministry explained that increasing the transparency of cash circulation and the ability to compare it with legal income would benefit society as a whole — the share of the shadow economy would decrease, fair competition among entrepreneurs would strengthen, and the level of social protection for workers would increase. The growth of tax revenues would allow the state to better meet public needs.

It was planned to amend the regulation by clarifying the procedure for transmitting information to the State Revenue Service (SRS). It was expected that credit and other financial institutions would be required to provide data on cash transactions of clients exceeding a set threshold.

The discussion was about transmitting information on cash deposits of 750 euros or more in one transaction, as well as cash withdrawals of 1500 euros or more. The SRS planned to use this data for analysis and risk assessment.

The threshold of 750 euros for cash deposits was chosen considering the higher risks associated with introducing cash into the financial system. This was intended to facilitate more effective identification of funds of unknown origin, for example, if the deposited amounts exceed declared income.

For cash withdrawal transactions, a higher threshold of 1500 euros was established, as the origin of these funds is already known to the financial system, and, accordingly, the risks are lower. Special attention was planned to be paid to the accounts of small businesses and their board members to identify possible "envelope" payments.

It was anticipated that the data would be sent to the Financial Intelligence Unit, which would pass it on to the SRS for analysis and tax compliance control. The Ministry of Finance noted that these changes are part of a plan to limit the shadow economy and are aimed at increasing the transparency of cash circulation.

According to estimates by the Latvian Financial Industry Association, with the introduction of a threshold of 750 euros, the Financial Intelligence Unit and the SRS would receive data on approximately 28,000 individuals who deposited about 43 million euros, and on 18,000 legal entities that deposited about 83 million euros each month. Also, about 3,800 individuals would withdraw more than 1500 euros monthly (a total of about 23 million euros), and about 540 enterprises would withdraw about 60 million euros.

Previously, the Ministry of Finance emphasized that the new procedure would not create additional obligations or restrictions for residents and entrepreneurs, as they would retain the right to freely dispose of their cash.

The SRS would receive information from credit and financial institutions, not from their clients. Clients would not need to automatically explain each cash deposit or withdrawal transaction. Mass individual control was also not planned — data exchange was viewed as a tool for targeted risk assessment.

This would mean that honest taxpayers would not face additional administrative burdens, and more thorough checks would only be conducted in cases that raise suspicions, for example, in cases of discrepancies between declared income and turnover.

In such situations, the SRS could request clarifications or suggest voluntarily declaring previously unaccounted income, and in the absence of a response, initiate a tax audit.

It was also noted that such measures are in line with international practices for exchanging financial information to combat tax offenses and tax evasion. Similar regulations are in place in several European Union countries.

It was previously reported that the amendments presented in the summer of 2025 provided for the obligation to submit threshold declarations for cash deposits of 750 euros, cash withdrawals of 1500 euros, as well as for cashless transfers of cash without opening an account for amounts of 1000 euros or more.