On December 3, 2019, the Parliament of the Republic of Lithuania adopted amendments to the Law on the Prevention of Money Laundering and Terrorist Financing (hereinafter – AML Law), which will enter into force in January 10, 2020.
The amendments were adopted in implementation of May 30, 2018 Directive of the European Parliament and of the Council (EU) 2018/843 on preventing the use of the financial system for Money Laundering and Terrorist Financing, amending the Regulation (EU) No. 2015/849 of the European Parliament and of the Council and amending the Directives 2009/138/EC and 2013/36/EU.
- Virtual currency exchange operators, depository virtual currency wallet operators and others will be subject to AML Law. The provisions of the Law shall be applied to the existing clients of the depository virtual currency wallet operators and the virtual currency exchange operators according to their level of risk immediately, but no later than 01.07.2020.
- A list of politically exposed people (PEP) positions will be created and subject to permanent amendment by Financial Crime Investigation Service (hereinafter – FCIS);
- Financial market participants will have a right to obtain documents, data or information directly from state information systems or registers to identify customer and beneficial owner;
- Requirements of beneficial owner identification have been strengthened. The change comes into force from 01.08.2021.
- Customer and beneficial owner enhanced due diligence requirements have been strengthened for customers from high-risk third countries identified by European Commission (EC);
- Requirements of simplified customer and beneficial owner due diligence have been clarified.
Detailed overview of main changes on preventing the financial system for Money Laundering and Terrorist Financing
Virtual Currency Exchange and Depository Virtual Currency Wallet Operators as well as other subjects must abide to AML Law
Virtual currency operators are required to identify customer and beneficial owner as well as manage monetary transaction log. Additionally, virtual currency operators must report about the customer identification data and its information on virtual currency exchange transactions or transactions in virtual currency to FCIS if the value of such monetary operation or transaction is equal to or greater than EUR 15 000.
Virtual currency operators are required to identify customer and beneficial owner as well as manage monetary transaction log.
AML Law stipulates that depository virtual currency wallet operators and virtual currency exchange operators must be operated by legal entities or branches of legal entities. Virtual currency operators are also obliged to inform the officer of the State Enterprise Centre of Registers of such activities within 5 business days prior to the commencement of activities of depository of virtual currency wallet or virtual currency exchange.
What is more, FCIS will monitor the activities related to ML / TF prevention of virtual currency exchange and depository virtual currency wallet operators.
Such provisions are intended to give greater credibility and transparency to the participants of virtual currency market, as well as promote harmonious and properly supervised development of this sector.
Other obliged entities in addition to the existing list, will be:
– Persons who, in the course of their main business or profession, undertake to provide material help, assistance or consulting on tax issues;
– Persons who provide real estate brokerage services (for transactions where the monthly rent is equal to or greater than EUR 10 000 or its equivalent in foreign currency);
– Persons who are engaged in economic commercial activities involving trade of art and / or brokerage of art works if the value of the transactions is equal to or greater than EUR 10 000 or its equivalent in foreign currency;
– Free-trade areas engaged in economic commercial activities involving storage, trade or brokerage of art works if the value of transactions is equal to or greater than EUR 10 000 or its equivalent in foreign currency.
The FCIS is responsible for establishment of PEP positions list in Lithuania
Public authorities are obliged to provide or update the FCIS about public duties which are considered PEP at least every 4 years. The information will be published on the FCIS website as well as forwarded to the European Commission (EC).
Public authorities are obliged to provide or update the FCIS about public duties which are considered PEP at least every 4 years.
Whether a person is a PEP will be possible to determined based on his or her position. The PEP positions list will be compiled by each EU Member State and consolidated into a single list by EC.
The right to obtain information from state information systems or registers for customer and beneficial owner identification
Financial market participants will be able to obtain documents, data and information necessary to identify customer and beneficial owner from state information systems or registers if the customer confirms such documents, data or information by signature.
This means that financial market participants will no longer need to ask business customers to provide certificate of registration and, possibly, the scope of information needed to collect directly from customer might decrease.
Strengthened requirements of beneficial owner identification
The AML Law imposes obligation to use the Information System of Legal Entities Participants (JADIS) to verify details about legal entity’s beneficial owner. EU member states are obliged to create such register.
What is more, financial market participants become intermediaries between JADIS and legal entity. In the event of a discrepancy between information on legal entity in JADIS and information held by the financial market participant, customer shall be prompted to update information on its beneficial owners to JADIS administrator.
Financial market participants shall be prohibited from starting business relationship or from conducting transactions if information on customer’s beneficial owner is not available on JADIS or information available does not match the information held by financial market participant.
AML Law imposes obligation to use the Information System of Legal Entities Participants.
In addition, JADIS will be integrated into European Central Platform which should make it easier to verify beneficial owners of legal entities established in the EU. However, if legal person is not established in the EU, then financial market participants should use the registry system of the country in which the legal entity is established to verify its beneficial owners.
Strengthened customer and beneficial owner enhanced due diligence (EDD) requirements for customers from high-risk third countries identified by the European Commission (EC)
More stringent measures and extensive information is required when applying EDD on customers from high-risk third countries identified by EC. For instance, it will be required to ensure that the first payment by customer is made from that customer’s account held with a credit institution and that credit institution must be established in the EU or in a third country which meets AML Law requirements.
In addition, Director of the FCIS will have power to require financial market participants to take additional measures to mitigate risk posed by individuals or legal entities established in high-risk third countries identified by the EC.
Requirements of simplified customer and beneficial owner due diligence (SDD) have been clarified
SDD will be possible when the total value of electronic money issued in a calendar year is subject to a threshold of EUR 1 000 or its equivalent in foreign currency.
For payment initiation and account information services, SDD may be applied when the name and surname of the individual and the name of legal entity as well as information about the bank account (opened in EU member state) is available for the provision of these services.
It is also specified which requirements of AML Law can be derogated from when applying SDD.