1 December 2017 was the date when the amendments to the Anti-Money Laundering and Counter-Terrorism Financing Law (“the Law”) entered into force.
According to the amendments, legal persons registered in the public registers of the Enterprise Register (joint stock companies, limited liability companies, partnerships, etc.) by 1 March 2018 are required to inform the Enterprise Register about their beneficial owners (“BO”). From 1 December 2017 onwards, when a new legal person is registered or changes are made in the shareholding or board structure, information on the BO should be submitted together with the application for changes, otherwise the changes will not be made in the Enterprise Register. Where the information submitted regarding the BO changes, the updated information should be submitted immediately, but no later than within 14 days of the change.
What is a BO
The BO is a natural person who is an owner of more than 25% of a legal person either directly or indirectly or in whose name or interest the legal person operates, or, in the absence of such persons, a natural person who controls the legal person directly or indirectly. For example, the board of the parent company.
When is it possible not to provide this information
It is not necessary to provide information on the BO if it has already been submitted to the Enterprise Register as part of other statutory reporting obligations and the manner in which the BO exercises control over the legal person derives from the registered status, for example, only from the status of a shareholder of a limited liability company. Exempted from providing this information are also joint stock companies listed in regulated markets and for which the manner in which the BO exercises control derives from his/her shareholder status.
What information should be submitted
Concerning its BO, a legal person has an obligation to provide the name, surname, personal identity number issued in the Republic of Latvia (if any), birth date, number of a personal identification document, date of its issue, country and institution which has issued the document, nationality, country of permanent residency, as well as the manner in which control over the legal person is exercised, including the person who acts as an intermediary in exercising control. Where control is exercised by intermediation of other natural persons, the following should be provided: their names, surnames and personal identification numbers of the Republic of Latvia (if any) or birth dates, and where control is exercised by intermediation of other legal persons: their names, registration numbers and registered addresses.
What is the benefit
Seeking to maintain availability of information on counterparties and limit the risks of money laundering and terrorism financing, starting from 1 April 2018 the information submitted to the Enterprise Register regarding BOs will be available to any person using the on-line information system (lursoft.lv). Subjects of the law such as credit institutions, tax consultants, outsourced accountants, certified auditors, notaries and attorneys and others who are under the obligation to establish the BO of a customer by performing customer due diligence will be able to perform it also using this new on-line information system.
Consequences of failure to provide information
There are no specific sanctions included in the amendments to the Law for failure to provide information on the BO; however, should it be the case, from 1 March 2018 legal persons will not be able to make other changes in the public registries maintained by the Enterprise Register and may be subject to certain restrictions on receipt of services from credit institutions.
