December 30, Mr. Amis Lagzdins Senior Compliance Adviser Financial and Capital Market Commission Kungu Street 1. LV-1050 Riga, Latvia

Transcription

1 December 30, 2015 Mr. Amis Lagzdins Senior Compliance Adviser Financial and Capital Market Commission Kungu Street 1 LV-1050 Riga, Latvia Re: Anti-Money Laundering ("AML") Compliance Services Dear Mr. Lagzdins: This letter and the exhibits attached hereto (collectively, the "Agreement") confirms the retention of Navigant Consulting, Inc. ("Navigant") effective as of December 30, 2015 by the Financial and Capital Market Commission ("FCMC" or "Client") to provide AML compliance and advisory services. I. Our Understanding of Your Needs Navigant understands that FCMC, an autonomous public institution that carries out the supervision of Latvian financial institutions, is seeking assistance with the development of a testing methodology for reviewing the international/nonresident banks within the Latvian financial sector against Bank Secrecy Act ("BSA")/AML and the Office of Financial Assets Control ("OFAC") program requirements. II. Delivery of Services Client agrees to provide Navigant with timely access to information, locations and personnel reasonably necessary for the performance of the Services. Without the prior written consent of Navigant, in no event shall Navigant's name be mentioned nor shall Navigant Deliverables be disclosed, referenced, used in connection with any offering documents or shared with any third party, except (a) as required by law; (b) as required by any government or regulatory agency with supervisory authority over Client; and (c) Client's legal advisors and auditors. In addition, Navigant's work product is to be used only by the FCMC and not for any other purpose without Navigant's written approval. Please keep in mind that, to the extent that Client asks Navigant to reach conclusions or form opinions, Navigant is obligated to provide its best independent judgment without regard to the impact that such conclusions or opinions may have upon the above referenced matter. It is further understood that Navigant may review work product prepared by parties other than Navigant on behalf of Client, and accordingly, Client agrees to hold harmless and indemnify Navigant for any and all claims, damages, demands, liability and costs (including expenses and attorney fees, as incurred) arising from negligent acts, errors and omissions of the parties and/or professionals who prepared such work product. The preparation of Navigant's work product is an evolving process during which Navigant's analysis is focused and refined as its research and document review proceeds. Preliminary conclusions, superseded drafts, notations, analyses, work lists and irrelevant data are not a part of, and will not be recorded in, Navigant's final work product. Such documents may be appropriately discarded on a routine basis as work tasks are completed. Of course, circumstances may arise that require the retention of such drafts or other interim documents,

2 including but not limited to subpoenas and court orders. Navigant understands that Client will provide it with instructions regarding document retention and production procedures that Client expects it to follow. Navigant shall provide periodic updates to the Client when requested, and any others whom the Client requests receive such updates throughout the performance of this project. Navigant shall perform the specific tasks contained in this Agreement, as well as such other services, functions and responsibilities that are an inherent, necessary or customary part of a project of this nature. III. The Services Disclaimer Navigant will not be auditing any financial statements or performing any attestation procedures, nor will Navigant be providing legal advice, in the course of the Agreement. Navigant's services are not designed, nor should they be relied upon, to disclose internal weaknesses in internal controls, financial statement errors, irregularities, illegal acts or disclosure deficiencies. Client agrees that prior to the submission of any statement describing Navigant's experience, credentials, or the nature of Navigant's work and opinions related to this Agreement, or the publishing of any report authored by Navigant, Navigant will provide a reasonable opportunity to review such statement for factual accuracy and provide appropriate disclaimers and legends to any such information and materials. IV. Approach and Methodology Navigant's approach and methodology for this project is customized to ensure that we provide the Services requested by FCMC in the most cost-effective and comprehensive manner possible. To accomplish this goal, Navigant proposes, consistent with FCMC's request, to conduct this project in the following two-phased approach. Development of a Testing Methodology Navigant will develop an independent testing methodology, based on BSA/AML/OFAC legal and regulatory requirements, to be used by the FCMC regulators for assessing the international banking/nonresident banks within the Latvian financial sector. V. Deliverable Navigant will develop and document a written methodology in English for the independent testing of international banking/nonresident within the Latvian financial sector, based on BSA/AML/OFAC regulatory requirements. VI. Team and Qualifications Our team for this project, which includes former regulators, prosecutors, law enforcement officials and compliance professionals, is intimately familiar with both U.S. and international AML and sanctions regulatory requirements and has a wealth of practical expertise and experience conducting large-scale AML and sanctions compliance assessments for various types of financial institutions

3 VII. Timing Navigant is prepared to begin the engagement upon receipt of an Executed Letter of Engagement. Assuming that an executed Letter of Engagement is received by Navigant prior to year-end 2015 and given scheduled time-off of Navigant team members for the upcoming holidays, Navigant anticipates the timeline as follows: January 11,2016 February 5,2016 February 12,2016 February 17,2016 Navigant begins drafting methodology Navigant completes the methodology and provides a draft version to FCMC FCMC review Navigant provides final version to FCMC VIII. Fees and Expenses Navigant's pricing is based on our experience performing similar projects and our knowledge of what efforts and costs are required to successfully complete the project of this size and scope in a timely manner that meets both the client's and regulator's expectations. Naviganf s professional fees are based on the experience levels of the professionals involved in the engagement and the actual professional time incurred at the billing rate of each Navigant professional working on this engagement. Navigant estimates the fees for the development of the Methodology to be approximately 41,900. Navigant's fees do not include any services necessary for translation assistance. Navigant will make every reasonable effort to perform the assignment in a cost-effective manner and will keep FCMC apprised of any circumstances which may cause our estimated fees to exceed the estimate we have provided. Naviganfs hourly rates are based on the experience and skills of the personnel involved and are adjusted periodically, usually on January 1 st of each year. Navigant does not predict or warrant the outcome of any particular matter or issue, and Navigant's fees are not dependent on such outcomes. Independent contractors or subcontractors may be utilized from time to time, at the applicable rates set forth above. Professional services will be billed monthly based on hours incurred and the rates in effect at the time services are performed. For certain assignments, invoices may be sent semi-monthly. For certain assignments, invoices may be sent semimonthly. In addition, an administrative fee of 5% of fees will be billed monthly to cover costs related to this project for telephone, technology/connectivity, postage, supplies, reproduction and data processing. Related expenses will be billed monthly at cost with no mark-up. Navigant will invoice on a monthly basis and will provide invoices to Client. Navigant's invoices are due upon receipt, and payment of professional fees and expenses is expected within 30 days of the invoice date. Any objection to the invoice must be made within 60 days after the date of the invoice; lack of timely objection to an invoice shall evidence Client's agreement to all invoiced amounts. A late charge of 1% per month will accrue on undisputed amounts not paid within 30 days of the date of the invoice. If payment on invoices is past due more than 60 days, Navigant reserves the right to terminate the engagement or suspend services until payment is received. If a report, deposition, declaration, or trial testimony is required, Navigant reserves the right to require payment of outstanding fees and expenses prior to submission of such report or testimony. Client will be solely responsible for all financial obligations to Navigant in connection

4 with this Agreement. All costs of collection of amounts due and owing hereunder shall be paid by Client. From time to time, Navigant may give Client an estimate of fees and expenses relating to this matter. Such estimates are subject to many unknown and uncontrollable variables. As such, estimates are projections at a particular point in time. Estimates may change as Navigant moves forward, and estimates are not an agreed upon fixed fee. Navigant does not anticipate any travel-related expenses for this engagement. Should expenses be incurred however, in addition to our professional fees, Navigant will bill for engagement-related expenses, which will include meals, travel and lodging. Such expenses will be billed monthly at cost with no mark-up. Travel time for international travel in excess of five and one-half (5 ½) hours will be billed at one-half of the hourly rates set forth above unless personnel are working on this matter while traveling at which time they will bill at the hourly rates set forth above. We will not bill for domestic travel or international travel less than five and one-half (5 ½) hours. Navigant will provide a Certificate of Residence to be issued by the United States Internal Revenue Service ("IRS"). Navigant understands that it will take approximately 90 days for Navigant to receive the Certificate of Residence from the IRS. IX. Retainer It is customary for Navigant to require the payment of a retainer in undertaking a new engagement. Navigant has not requested a retainer in connection with this engagement. However, if Navigant's invoices are not paid when due or if circumstances warrant, Navigant reserves the right to require a retainer, as a condition of Navigant's continuing this engagement. X. Absence of Conflicts of Interest We have performed an internal search for potential conflicts of interest and are not aware of circumstances that constitute a conflict of interest or that would otherwise impair our ability to provide objective assistance. Our determination of conflicts is based primarily on the substance of our work and not the parties involved. We have performed an internal search for potential conflicts of interest and are not aware of circumstances that constitute a conflict of interest or that would otherwise impair our ability to provide objective assistance. Our determination of conflicts is based primarily on the substance of our work and not the parties involved. XI. The Term The term of this Agreement is from the Effective Date to (i) termination of this Agreement by either party by giving written notice to the other (such termination shall be effective on the date that the party receives the notice in fact); (ii) the completion of the Services; or (iii) Client's receipt of a final invoice for professional fees. Notwithstanding, (i) and (ii), this Agreement shall terminate if Navigant has not performed Services in the preceding twelve months. XII. Entire Agreement This Agreement constitutes the entire agreement between Navigant, on one side, and Client on the other side. In the event Client requires Navigant to execute a purchase order or other Client

5 documentation in order to receive payment for Navigant's services, the terms and conditions contained in such purchase order or documentation shall be null and void and shall not govern the terms of this Agreement. This Agreement is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein and supersedes any other such promises or representations. It can only be modified by a written agreement signed by duly authorized representatives of each party. If Client wishes to engage Navigant to provide the Services please sign in the space provided and return an executed original to Navigant. Very truly yours, Navigant Consulting, Inc. By: Agreed to and Accepted by: Financial and Capital Market Commission By: