Obligations of Latvian banks in relation with the identification of a customer
Company formation and accounting in Latvia
Last updated: 2015-11-20
The law on prevention of legalization of criminally acquired wealth funds and financing of terrorism (Money Laundering and Terrorist Financing Prevention Act) and related legislation is applicable in Latvia.

According to the law the bank (credit institution) is a bank, institution of electronic money, as well as branch and representative office of a bank or institution of electronic money, registered in the Republic of Latvia, or in another country - member of the EU or in a third country.

The legislation also defines the signs of unusual transactions and the meaning of suspicious transactions.

The signs of unusual transactions are:
• In a transaction is used a cash, amounting to 60,000 euro or more (except for the payment of wages).
• A transaction amounting of 2000 euro and more, in which coins or banknotes with a small denomination are exchanged to banknotes of larger denomination (or vice versa), or exchanged to other banknotes of the same denomination.
• The client, using credit cards or other payment card, during a month withdraws the cash in the amount of 60,000 euro or more.
• A client who does not have an account in the bank buys or sells foreign currency in cash, the amount of which (converting in lats) is 8000 euro or more.

A suspicious transaction is a transaction that raises suspicions about the legalization of criminally acquired means or financing of terrorism, or attempt to do the previously mentioned activities, or related criminal activities.

Criminally acquired means are the means:
• Directly or indirectly acquired from criminal activity.
• Which are specified (mentioned) in the Latvian Criminal Procedure Law as "the property, including financial funds obtained by criminal means."
• Which are owned or controlled by a person, which is included in the list of persons suspected in involvement in terroristic activities.
• Which are owned or controlled by a person, about which entities of operational activities, pre-trial investigation bodies, public prosecutor or the court has information that gives reasonable grounds for suspicion of committing a criminal offense related with terrorism or involvement in it.

Banks must establish a system of internal control, in which at least the following provisions are included:
• Procedure of identification of customers.
• Procedure of assessment of the risk of legalizing of criminally acquired funds and procedure of assessment of the financing of terrorism.
• The procedure and the extent to which the client should be explored (examined.
• Supervision of transactions of customers.
• How to identify unusual and suspicious transactions and the order in which the bank will refrain from engaging in suspicious transactions.
• How to inform the inspection service about unusual or suspicious transactions.
• How to store data and documents.
• The rights, duties and liability of employees.

Identification of individuals is based on an identity document. The document must state the following information: name, surname, identity number (date of birth), number and date of issue, the state and the authority which issued the document.

Identifying a legal entity, the following information (documents) is necessary:
• Documents proving the legal establishment or registration.
• Information about the legal address.
• Information about the persons entitled to represent the entity.

By studying (examining) of the client, the bank performs the following steps:
• Checks (gets) information about the beneficiaries.
• Receives information on the purpose and essence of the planned transaction (-s) (what services the client is planning to receive, the origin of funds, the amount and number of transactions, type of business of the client).
• Supervises the transactions. Particular attention is drawn to transactions of the unusually large volume, to complex transaction or related transactions, which have no apparent economic or obvious legal aim. Also, particular attention is drawn to transactions in which are involved persons from third countries where are no legislation against the legalization of criminally acquired funds and terrorism. Or from countries that refused to cooperate with relevant international organizations.
• Ensures updating of documents, data and information.



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