Since electronic money and payment institutions (hereinafter – Institutions) are facing problems on opening bank accounts in credit institutions for executing the clients‘ payments and for the safeguarding the funds of the clients, the Bank of Lithuania has prepared and approved its position on the Institutions‘ right to operate with the opened bank accounts in credit institutions.
The Bank of Lithuania holds its position that refusal to engage in a business relationship or the termination of a business relationship with the Institutions (refusal to open the bank account or close it) should be applied only in extreme cases when all other risk mitigation measures are not available.
ECOVIS ProventusLaw presents the relevant aspects disclosed in the position of the Bank of Lithuania that every Institution should get familiar with.
Types of bank accounts opened (to be opened) in the Institution’s name
The Bank of Lithuania, while categorizing the types of bank accounts opened (to be opened) in the name of the Institutions:
- Institution’s current bank account;
- Institution’s bank account for the safeguarding of funds of an Institution’s clients (can be opened only in a credit institution of the Republic of Lithuania or another EU / EEA country);
- A bank account for the execution of payments by the Institution’s clients (this account may be opened in another Institution, if such an account is not together with the client’s custody account);
points out that it would be good practice for credit institutions to be able to open all three types of bank accounts for institutions.
The principles of objectivity, non-discrimination and proportionality
The Bank of Lithuania emphasized that credit institutions must not discriminate Institutions when they apply to or use credit institutions to open a bank account. It is specified that the requirements for opening or using the bank accounts for executing the clients‘ payments and for the safeguarding the funds of clients should not differ from the requirements applicable to other financial market participants providing similar payment services and / or opening custody accounts for client custody purposes. According to the Bank of Lithuania, credit institutions should cooperate with all Institutions without exception and not impose restrictions on them without objective and reasonable reasons, and the scope of the above requirements and the means of their implementation should meet the necessary and reasonable purposes of using these accounts.
In the event that a credit institution is unable to provide part of the services requested by the Institution for valid reasons related to the money laundering and / or terrorist financing risks posed by the Institutions, this should not be considered an obstacle to the institution’s access to other services provided by the institution. is manageable.
The position of the Bank of Lithuania regarding the requirements of money laundering and / or terrorist financing prevention
According to the Bank of Lithuania it is essential that at the very beginning of the business relationship, the credit institutions and the Institutions themselves should discuss and establish specific conditions and measures related to such business relationship, which both Institutions and credit institutions will take to properly manage risks and implement requirements on money laundering and / or terrorist financing.
Furthermore, it is stated that extreme measures taken by credit institutions, such as the termination or refusal to enter into a business relationship with the Institution on the grounds of money laundering and / or terrorist financing, should be implemented only after assessing individual circumstances on each specific case and only when any other possible money laundering and / or terrorist financing measures are exploited, cannot be applied and / or in cases when the credit institution does not have the ability to properly comply with the requirements for the prevention of money laundering and / or terrorist financing and manage these risks by starting and / or continuing business relationship with a particular institution. For example, if the Institution, for unknown reasons, avoids or delays in providing information, conceals it and / or provides inaccurate information, uses a bank account for other purposes, performs suspicious transactions in the bank account, etc.
Safeguarding account closure
The Bank of Lithuania has indicated that the closure of safeguarding account when the Institution does not have an analogical account opened in a different credit institution, increases the risks of client funds safeguarding. According to the Bank of Lithuania, credit institutions before making the decision to close the abovementioned account, should:
- inform the Institution of such a decision as soon as possible, giving it sufficient time to open analogical accounts in other credit institutions;
- if the Institution provides information about the safeguarding account’s opening in the name of the Institution in other credit institution, transfer the funds held in the closed accounts to the account indicated by the Institution;
- if, for objectively justifiable reasons, the Institution fails to open analogical accounts in other credit institutions specified in the legislation by the scheduled closing date of the safeguarding account, provide the Institution with additional time to complete such actions by extending the custody account closing term.
The Bank of Lithuania encourages the Institutions and the credit institutions to closely co-operate and to perform their obligations arising from the agreement as economically as possible.