COVID-19 is rapidly accelerating changes in our ways of communicating and making business commitments, bringing those processes into virtual space. But these changes involve their own risks that businesses need to tackle.
EU and national AML regulations already opened opportunities for remote KYC procedures some time ago. These allow someone’s identity to be reliably established using technical solutions without face-to-face interaction. For these solutions to be AML compatible, among other identification methods not including the physical presence of the person, Lithuania allows identification using direct image transfer:
1. Direct video transfer or direct photo transfer of an ID document plus at least an advanced electronic signature.
2. Direct video transfer or direct photo transfer of an ID document and facial image.
These solutions are mainly used by fintech companies to fulfil AML requirements and specific service retail companies for client identification purposes.
Lithuania (and the Baltics in general) are considered a fintech and startup friendly jurisdiction and as a result have developed several competing products allowing interested parties to outsource a significant part of their client identification and AML technicalities.
However, there are no actual obstacles to use of these solutions in business to business relations where for one or the other reason use of a qualified electronic signature is not possible or limited. Proper identification can be outsourced to a third party providing KYC services securing the interests of all partners.Another area where such solutions may have a positive push is corporate management and shareholders’ meetings in particular. As of 2009, Lithuanian company law established an option to participate in shareholders’ meetings via electronic communications.
However, although this alternative sounds convenient, it did not become popular (at least until now) due to lack of clarity as to how to establish a shareholder’s identity and ensure the security of information transmitted. Existing remote identification solutions can be the answer to this question. This possibility has become extremely important in the current COVID-19 situation, where physical participation by shareholders scattered around the world has become not only an expensive inconvenience, but also now a clear impossibility due to worldwide travel restrictions.
Republic of Lithuania Law on Companies;
Republic of Lithuania Law on the Prevention of Money Laundering and Terrorist Financing;
Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, and amending Directives 2009/138/EC and 2013/36/EU;
Regulation (EU) No 910/2014 of the European Parliament and of the Council of 23 July 2014 on electronic identification and trust services for electronic transactions in the internal market and repealing Directive 1999/93/EC