Money laundering prevention – banks and companies face new challenges

Recent banking sector scandals are impacting both new and long-established businesses in Lithuania 

Author: Tanja Pejanovic, Referendar at country court in Wiesbaden (at present with bnt Vilnius)

Numerous banks in Scandinavia and the Baltic States have recently come under investigation due to opaque transactions in favor of unknown beneficiaries and accusations of money laundering. Investigations by national authorities are still ongoing.

The banks have reacted quickly to the situation and are now demanding more transparency from their clients. New and existing companies have to answer extensive KYC (know your customer) questionnaires and provide detailed information as to company structure in order to transparently show who will be benefiting from the company in the future. If companies do not provide sufficiently detailed information or, worse, ignore bank enquiries, bank accounts may be blocked, causing considerable inconvenience.

Due to the increased auditing obligation of banks and the amount of information to be provided, account openings are taking longer than was previously the case.

When dealing with new businesses different banks have reacted differently to their increased duty to provide information. Some banks open accumulative accounts initially without detailed verification and shift the duty to provide information to a later point in time when the account is transformed to a current account. Other banks demand comprehensive information even for the initial step, i.e., opening accumulative account. The aim of advising founders and existing companies is to raise awareness of the banks’ approach and the importance of providing all requested information quickly and comprehensively. Choosing the appropriate bank can often be immensely important for timing in terms of company foundation and unbroken smooth financing.

SourceLaw: REPUBLIC OF LITHUANIA LAW ON BANKS; 30 March 2004 No IX-2085

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