Latvia Tightens Squeeze on Beneficial Ownership Transparency
Boosting Corporate Governance and Preventing Illicit Financial Flows
In an effort to enhance transparency and accountability, Latvia has introduced strict rules for identifying beneficial owners of foreign entities operating in the country. These new regulations aim to shed light on the true power behind the scenes, making it more difficult for individuals to conceal their involvement in offshore businesses.
Defining Beneficial Owners
According to the amendments, a beneficial owner is defined as any natural person or entity that holds direct or indirect control over:
- 25% or more of the capital shares
- 25% or more of the voting rights
- Control through contracts, ownership stakes, or directorship positions
Requirements for Foreign Entities Operating in Latvia
All foreign entities opening a representation in Latvia must provide detailed information about their beneficial owners, including:
- Name and surname
- Date of birth
- Nationality
- Country of residence
- Explanation of how they exercise control over the entity
- Documentation to substantiate this claim
Enhanced Monitoring by the Enterprise Register
The Enterprise Register has been empowered to request additional documentation from foreign entities if there are doubts about the accuracy of the information provided or if it is unclear who the true beneficial owner is. In cases where no natural person can be identified as the beneficial owner, the application must be certified with reasons explaining why this is so.
Experts’ Reaction
Experts say that the new regulations will make Latvia a more attractive destination for legitimate businesses and investors seeking transparency and accountability in their dealings.
“By requiring foreign entities to disclose their beneficial owners, we are creating a more level playing field and reducing the risk of illicit activities,” said a spokesperson from the Enterprise Register.
Implementation and Impact
The changes have already taken effect, with all foreign entities operating in Latvia required to comply with the new rules by providing information about their beneficial owners. The regulations are part of a broader effort to strengthen corporate governance and prevent money laundering in Latvia.