Lithuania – Know Your Customer (KYC) Rules

 

 

Lithuania is not a regional financial center. Lithuania has adequate legal safeguards against money laundering; however, its geographic location makes it a target for smuggled goods and tax evasion. The sale of narcotics does not generate a significant portion of money laundering activity in Lithuania. Value added tax (VAT) fraud is one of the biggest sources of illicit income, through underreporting of goods‘ value. Most financial crimes, including VAT embezzlement, smuggling, illegal production and sale of alcohol, capital flight, and profit concealment, are tied to tax evasion by Lithuanians. There are no reports of public corruption contributing to money laundering or terrorist financing.

Lithuania has free economic zones (FEZ) in the cities of Klaipeda and Kaunas. As of yearend 2010, there are 20 businesses operating in the Klaipeda FEZ and nine in the Kaunas FEZ. The companies operating in the zones have the same accounting and identification responsibilities as those operating outside the zones. Lithuania‘s EU accession agreement permits the indefinite operation of existing free trade zones, but precludes the establishment of new ones.

KNOW-YOUR-CUSTOMER (KYC) RULES:

 

Enhanced due diligence procedures for PEPs:

 

PEP is an abbreviation for Politically Exposed Person, a term that describes a person who has been entrusted with a prominent public function, or an individual who is closely related to such a person. The terms PEP, Politically Exposed Person and Senior Foreign Political Figure are often used interchangeably

    • Foreign PEP: YES
    • Domestic PEP: NO

Lithuania – KYC covered entities

 

The following is a list of Know Your Customer entities covered by Lithuanian Law:

    • Banks, credit unions, and financial leasing firms
    • Insurance companies and brokers
    • Lawyers, notaries, tax advisors, auditors, and accountants
    • Investment and management companies
    • Real estate brokers and agents
    • Gaming enterprises
    • Postal services
    • Dealers in art, antiquities, precious metals and stones, and high-value goods

Lithuania – Suspicious Transaction Reporting (STR) Requirements:

 

Number of STRs received and time frame:  207 by November 2011

Number of CTRs received and time frame: 478,295 by November 2011

The following is a list of STR covered entities covered by Lithuanian Law:

    • Banks, credit unions, and financial leasing firms
    • Insurance companies and brokers
    • Lawyers, notaries, tax advisors, auditors, and accountants
    • Investment and management companies
    • Real estate brokers and agents
    • Gaming enterprises
    • Postal services
    • Dealers in art, antiquities, precious metals and stones, and high-value goods

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

 

Prosecutions: 13
Convictions: Nine

 

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

In 2011, the Lithuanian Parliament adopted the draft law amending the Code of the Administrative Infringements that envisions higher penalties for non-compliance with preventive measures, differentiating violations subject to administrative penalties. Administrative proceedings will be brought against individuals and organizations‘ management. Also in 2011, the Lithuanian Parliament amended the AML/CFT Law with a new Article under which customs controls will be applied to cash brought into or leaving Lithuania from or into other EU countries.

The Financial Crime Investigation Service cannot use civil law to forfeit assets, as there are no such laws in Lithuania.

According to the Baltic Anti-Money Laundering Survey 2011, a majority of Lithuanian banks have assessed the overall level of regulatory burden as acceptable, but at the same time reveal a need for better focused requirements in order to ensure a more effective AML system.