Ultimate beneficiaries: the register in Lithuania is not functioning, but banks are demanding information

Though the UBO register is in practice not functioning in Lithuania, companies are still obliged to collect their UBO data. Failure to do so may cause negative consequences.

Lithuania formally implemented the requirements of EU Directive 2015/849 on the register of beneficial owners of legal persons (UBOs) as early as in 2018, when amendments to legislation on establishing and operating the register came into force. However, implementation of the Directive has been limited to formal changes: actually establishing the register has not yet been achieved.

At the end of 2020, the government announced that the register should be launched by the end of this year (2021), but with uncertainties about financing the IT base, this is becoming less and less likely.

These delays and the formal attitude of the state send a wrong message to legal entities registered in Lithuania who are starting to believe that the requirements of EU Directive 2015/849 (in the part concerning UBO information) do not apply in Lithuania.

This approach is misleading because, despite delays in the registry, there is a clear obligation for legal persons themselves to collect and store UBO information.

Currently, there is no evidence of active monitoring or penalties imposed by the State itself.

However, banks and other financial institutions disagree with the lax attitude of the State. As part of their anti-money laundering programmes, they are demanding UBO information from both new and existing customers. The possible consequences of failure to provide this information include blocking financial transactions and accounts. As legal persons are obliged to hold and retain UBO information, the time limits for providing it are often very short. This means that, to ensure businesses are not inconvenienced, it is advisable to collect UBO information without waiting for the registry to become available.

Source:

29 June 2017 Law amending the Law on Prevention of Money Laundering and Terrorist Financing of the Republic of Lithuania. No. XIII-568

Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC

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