Latvia Pushes for Stricter Telecom Regulation as Financial Fraud Losses Top €10 Million

Latvia's financial sector is calling for urgent regulatory reforms to strengthen telecommunications providers' responsibilities in combating sophisticated fraud schemes that have cost clients of the country's four largest banks more than €10 million in just ten months. With fraudsters increasingly exploiting loopholes in telecom systems, industry leaders and policymakers are advocating for a comprehensive overhaul that would require operators to block spoofed calls, filter fraudulent SMS messages, and share intelligence across networks.

Background and Context

Financial fraud in Latvia has reached alarming proportions, with 5,763 cases recorded in the first ten months of the year alone, resulting in total losses of €10.038 million. According to data shared with industry representatives, phone scams accounted for more than half of these cases—3,089 incidents with losses totaling €5.548 million. The growing sophistication of these schemes has prompted financial authorities to warn that the problem extends beyond traditional banking concerns, touching on national security, institutional reputation, and public trust in digital communications.

Key Figures and Entities

Uldis Cērps, Chair of the Finance Latvia Association (FNA), has emerged as a leading voice calling for regulatory change. In meetings with lawmakers, Cērps has emphasized that "it is specifically the responsibility of telecommunications providers that must be strengthened" within the fraud prevention chain. His position has found support from Anda Čakša, Chair of the Saeima Budget and Finance (Tax) Committee, who acknowledges that current regulations leave significant gaps that fraudsters exploit. Both leaders stress that while financial institutions often bear the final cost of fraud, the schemes typically originate through telecommunications networks and social media platforms.

Legal and Financial Mechanisms

At the heart of proposed reforms is the practice of "spoofing," where fraudsters manipulate caller ID systems to display Latvian phone numbers while initiating calls from abroad. Currently, telecom operators can only automatically detect such spoofed calls when the Latvian-registered number belongs to their own network, creating a vulnerability that allows fraudsters to target customers of competing providers. Cērps argues that such calls should be "legally banned or specifically identified so that the recipient can clearly see that the call is not originating from Latvia." The proposed solutions would require amendments to Latvia's Electronic Communications Law and establish technical standards for cross-network fraud detection.

Beyond caller ID manipulation, the reforms target SMS-based fraud schemes that deliver links to malicious websites. Industry leaders propose implementing systems to identify and block these messages or, at minimum, provide clear warnings about potential fraudulent content. A centralized blacklist of fraudulent websites would enable operators to prevent malicious links from reaching users before damage occurs. The coordination framework would also facilitate information sharing between telecom companies, creating a unified defense against evolving threats.

International Implications and Policy Response

Latvia's proposed reforms reflect growing recognition that financial fraud operates across borders and requires coordinated international responses. Industry representatives point to regulatory approaches in other countries as models for strengthening telecom operators' duties in fraud prevention. The initiative also intersects with broader EU efforts through the Digital Service Providers Pact, which aims to hold platforms like Facebook and YouTube accountable for paid advertisements featuring fabricated videos of public officials used in fraudulent schemes. Čakša notes that while platforms can identify who orders and pays for these deceptive advertisements, current regulations lack mechanisms to prevent their distribution.

The legislative response in Latvia involves multiple parliamentary committees working in concert. The Budget and Finance Committee leads the initiative due to its mandate over financial stability, while the Legal Affairs Committee and Economic Affairs Committee must address telecommunications law aspects and technical implementation requirements. Officials have indicated that work on these amendments could begin in January, with parallel establishment of a multi-level working group on fraud prevention comprising both parliamentary supervision and executive branch operations.

Sources

This report draws on statements provided to LETA news agency, official data from Latvia's four largest banks regarding fraud losses, and public comments from the Finance Latvia Association and Saeima Budget and Finance Committee. Statistics on fraud cases and financial losses cover the period from January to October of this year.