Bank of Lithuania Sets New Risk Criteria for Payment Systems

The Board of the Bank of Lithuania has approved a new description of unacceptable risk criteria applicable to potential and existing holders of addressable BICs of the Bank of Lithuania’s payment systems. This resolution is aimed at ensuring that payment service providers (PSPs) are of good repute and comply with all requirements for the prevention of money laundering, terrorist financing, and the implementation of international sanctions.

Bank of Lithuania’s Unacceptable Risk Criteria

Sanctions:

• The Payment Service Provider (PSP), its group companies, beneficiaries, executives, or board members are subject to sanctions under the Republic of Lithuania’s or the USA’s OFAC sanction lists.

Negative information:

• The Bank of Lithuania has significant negative information about the PSP or its representatives that raises doubts about the soundness of the company’s management or operations.

Inconsistency with positions:

• MPT does not comply with the publicly disclosed position of the Bank of Lithuania at the time of application.

Blacklisting:

• The beneficiaries of the PSP are residents or nationals of countries on the Financial Action Task Force’s ‘blacklist’.

Russia and Belarus:

• The beneficiaries of the PSP are nationals of Russia or Belarus or companies established in these countries.

Provision of services in blacklisted countries:

• PSPs provide services to legal or natural persons established in blacklisted countries, Russia, and Belarus.

Non-compliance with legislation:

• PSPs provide services that do not comply with the requirements of legislation or allow sanctions to be circumvented.

Lack of risk assessment:

• The PSP did not carry out a risk assessment of all its activities relating the money laundering, terrorist financing and international sanctions.

Lack of procedures:

• PSP does not have procedures and tools for assessing clients’ ML/TF risks.

Non-compliance audit results:

• The compliance audit report of PSP shows that the firm is not compliant with the requirements of ML/TF and International Sanctions.

Recommendations of ECOVIS ProventusLaw

To ensure compliance with the new criteria and to mitigate risks, ECOVIS ProventusLaw recommends the following actions:

Regularly Review Sanctions Lists:

• Establish a routine process for monitoring and updating sanctions lists to ensure no involvement with sanctioned entities.

Conduct Thorough Due Diligence/audits on all the processes of the PSP

• Implement enhanced due diligence processes to identify and mitigate any negative information regarding management or operations.

Stay Aligned with Regulatory Positions:

• Stay informed about the Bank of Lithuania’s positions and ensure compliance at all times.

If you need a consultation relating the risk mitigation, prevention of money laundering, terrorist financing, and the implementation of international sanctions, do not hesitate to contact experts of ECOVIS ProventusLaw.