Latvia Introduces Strict Beneficial Ownership Rules to Combat Money Laundering
Introduction
In an effort to combat money laundering and terrorism financing, Latvia has introduced new amendments to its Law on the Prevention of Money Laundering and Terrorism Financing. These regulations require Latvian companies to disclose beneficial ownership information by December 1st, 2017.
What is a Beneficial Owner?
A beneficial owner is defined as an individual who owns or controls a company directly or indirectly, or establishes business relations with it. This includes individuals who hold more than 25% of capital shares or stocks in the company, have voting rights, or control them directly or indirectly.
New Requirements for Latvian Companies
From December 2017, all Latvian companies will be required to disclose information on their beneficial owners, including:
- Personal details such as name, surname, date of birth, citizenship, and country of residence
- Identification of individuals who have a reason to believe they are beneficial owners must inform their companies by February 1st, 2018
- Companies must store submitted information on beneficial owners in accordance with the law
Exclusions from Disclosure Obligation
There are several exclusions from the obligation to disclose beneficial owners, including:
- Cases where the company’s beneficial owner is its shareholder and necessary information has already been submitted to the Register of Enterprises
- If the beneficial owner is a stockholder in a joint-stock company whose stocks have been introduced to a regulated market
Consequences of Non-Compliance
Failure to submit required information on time can result in administrative sanctions, including fines ranging from €70 to €430. Repeated offenses may lead to more severe penalties.
Criminal liability also applies for failure to submit information stipulated by law or submission of knowingly false information, which can carry fines and short-term detention.
Access to Beneficial Ownership Information
From April 2018, third parties will be able to access beneficial ownership information in Latvian companies online for a fee. Access to this information on minors will be restricted.