bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Ceturtdiena 22.08.2019 | Name days: Rudīte, Everts
LatviaLatvia

Around 20,000 Latvian businesses will have to cease working with shell companies

FaceBook
Twitter
Draugiem
print
(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUApproximately 20,000 Latvian businesses will have to cease working with shell companies, said Lursoft board member Daiga Kiopa in an interview to Latvijas Radio.

She mentioned that society has a misconception that new amendments to the Law on the Prevention of Money Laundering and Terrorism Financing intended to strengthen the country’s financial system will only on Latvia’s banking sector. «Amendments will not apply solely to the banking sector – they will apply to companies like tax consultants, law firms, accountancy service providers and others. Approximately 20,000 companies in total,» said Kiopa, adding that these companies will have to sort their client base and cease cooperation with shell companies.

Lursoft board member reminded that the law includes three definitions of a shell company. According to the Law on the Prevention of Money Laundering and Terrorism Financing, a shell company is a legal person that fits one or three factors. Firstly – this legal person has no relation to actual business operations. Secondly, a legal person is considered a shell company if legislation of the country where it is located does not require businesses to submit financial accounts to state monitoring institutions. Thirdly, a company is considered a shell company if the legal person has no official address in the country where it is registered.

According to Kiopa, the first sign is the hardest one to determine.

She mentioned that Latvian banks have begun actively reviewing their clients. «This means enormous volumes of finances and resources are being used, because no one wants to experience the same as what happened with ABLV Bank,» said Kiopa.

Lursoft board member also predicts the new amendments will have a major impact on investors’ mood and Latvia’s national economy. «It may leave a large impact; we will all feel it. With such changes there is no point in hoping investments in Latvia continue growing or at least remain on their current level,» she said.

On Tuesday, 10 April, the government intends to discuss the matter regarding restriction of operations performed be risky clients in Latvia’s financial sector. Members of the Cabinet of Ministers will discuss this matter behind closed doors.

Finance Ministry has developed amendments to Law on the Prevention of Money Laundering and Terrorism Financing in order to strengthen the country’s financial system and reduce the proportion of financial operations performed by high-risk clients (shell companies). Amendments also include establishing information exchange between subjects of the law and law enforcement institutions to improve money laundering measures in the country.

A new section to the law will introduce a prohibition for credit institutions, payment processing institutions, investment broker associations and client deposit funds to work with shell companies.

The prohibition detailed in the law will not apply to clients of institutions registered in Latvia, because the country’s legislation makes it a requirement for all legal persons to submit regular financial accounts of their operations to appropriate supervisory institutions.

It is expected that this legislative draft will reduce the possibility of using Latvia’s financial system for criminal intent. Credit institutions and other subjects of the law will have to perform measures to reduce the proportion of risky clients.

Amendments also provide for improving information exchange for more efficient combating of financial crimes. It is the lack of cooperation and deficit of information that are two deciding factors that make public and private sectors’ work are the more difficult. Involvement of the private sector in information exchange is important not only because of information accessibility for this sector, but also because acquisition of information from the public sector can help prevent crimes.

The Saeima will soon have to discuss the legislative draft before its approval.


Leave a reply

  1. Zerry says:

    For foreign investors and business owners it´s better not to keep any extra euros in banks in Latvia – just in case. Of course as an idea to prevent financing of whatever illegal actions is good and supportive. But once again it looks like first hitting and then thinking, oops! what did we do again. And the butler is guilty as in stories ;)

Lithuania backs Sinkevičius as European Commission nominee

The Lithuanian parliament on Thursday, August 22, voted to support Virginijus Sinkevičius, the Lithuanian Minister of the Economy and Innovation, as the country’s pick for the next European Commission.

New member of Riga Freeport board rushes to meet controversial Šlesers, TV Ziņas says

Riga councilman Sandris Bergmanis has a day after being elected to the board of the Freeport of Riga Authority met with businessman and former Latvian minister Ainārs Šlesers, according to the news programme TV3 Ziņas.

Latvian power production drops to lowest level in year

Energy companies in Latvia produced 357 655 megawatt hours of power in July, which is the lowest level of national power output since July 2018. This allowed to cover 64% of the Latvian electricity consumption, according to AS Augstsprieguma tīkls.

Compensation payments of defunct Latvian PNB Banka begin

With operations of the Latvian bank, AS PNB Banka, stopped, the process of paying the guaranteed compensation to its clients has begun on August 22, according Citadele, the lender tasked with the payments.

Riga planning to introduce tourist fee – one euro per day

The Riga City Council is discussing a plan to introduce a tourist fee charging all places of tourist accommodation a fee of one euro per day.

Expert: With Belarus electricity freezing Baltics’ solidarity, Moscow is over the moon

In a blow to Lithuania’s far-reaching plans, Latvia has announced it looks forward to buying electricity from a nuclear power plant in Belarus’ Astravyets under construction 50 kilometres away from Vilnius.

WHO: Little risk from microplastics in drinking water

The World Health Organization has declared that the current level of microplastic particles in drinking water does not pose is not a serious risk for health, yet more research was necessary to determine their effects on human health.

Subsidies to controversial Riga transport company could increase by EUR 20 mln

Amid the criticism of the Riga municipal transport company Rīgas satiksme for its losses and their effect on the Latvian state budget, a plan has been voiced to increase its subsidies, now 120 million euros, by another 20 million euros, Latvian Radio reports.

Latvian Minister keeping adviser detained by corruption watchdog for now

Latvian Agriculture Minister Kaspars Gerhards will clarify the reason, why his advisor and the mayor of the city of Ogre, Egils Helmanis, has been detained by corruption investigators, to decide on keeping him in office.

Trump, Macron willing to readmit Russia to G7, despite Crimea annexation

The leaders of France and the United States have expressed their backing to readmitting Russia to the G7 conference of world powers in 2020, despite Ukraine’s Crimea still being held by Moscow, CNN reports.

Latvian excise tax income up by 8% in first half of 2018

The Latvian excise tax income in the first half of 2019 has been 521 million euros, –an increase by 39 million euros, or 8.1% – compared to the respective period last year, showed data by the Latvian State Revenue Service.

Latvian PM: Most of freely available 2020 budget funds already earmarked

Discussing the 2020 Latvian national budget, Latvian prime minister Krišjānis Kariņš pointed out that its fiscal space is limited by previous decisions and that the expected losses of the Riga transport company will not permit raising wages and pensions nationally.

Corruption watchdog detains Ogre city mayor Helmanis

The Latvian Corruption Prevention and Combating Bureau has on Wednesday detained the mayor of central Latvian city of Ogre, Egils Helmanis, according to LETA news agency.

New members to Freeport of Riga Authority elected, despite criticism

The Riga City Council elected to the Board of the Freeport of Riga Authority, mayor Oļegs Burovs and councilman Sandris Bergmanis, despite heavy criticism of the latter for incompetence and lack of vision.

Italy loses government, coalition of right-wing, anti-establishment parties collapses

Italy has lost its government with Prime Minister Giuseppe Conte announcing resignation after the right-wing League party pushed for no-confidence motion to its own government.

Kaljulaid opposed to Estonian minister after police chief scandal

Alleging that Estonian Interior Minister Mart Helme has violated the law by trying to sack top police chief, Estonian President Kersti Kaljulaid has stated that the minister has no place in the government.

Planned Latvian economic cases’ court conceptually backed by government

The plan by the Latvian Ministry of Justice to establish a court of economic cases has on Tuesday, August 20, been supported by the Latvian Cabinet of Ministers.

Riga deputy mayor posts go to Harmony and independent politician

In the Riga City Council, deputy mayors have been elected with one post going to Anna Vladova from Harmony and the other – to Vadims Baraņņiks from the group of independent councilmen.

Latvia charges energy company executives for attempted fraud

Two board members of Latvian power company SIA Rīgas enerģija have been charged in a criminal case for an attempt to acquire with deceit the rights to supply electricity as part of the mandatory procurement component programme.

Consumer protection: 34% of Latvians admit post-vacation financial difficulties

During vacation, 77% of Latvians spend more money than planned, but 34% admit having trouble making ends meet after vacation, according to a poll by the Latvian Consumer Protection Centre.

Firms like Riga transport company to be banned from working with losses, minister says

As the European Union’s statisticians have classified the Riga municipal transport company Rīgas satiksme in the debt of the national budget, it is planned in Latvia to prohibit such companies from working with losses, Latvian Finance Minister Jānis Reirs has told LNT 900 sekundes programme.

Minor dies in large fire in Latvia

An underage person has been found dead in a large fire in the Latvian region of Vidzeme, the Latvian Fire and Rescue Service has said. Person wascsaved from burning house in Liepāja.

UK aims to end free entry of EU citizens on October 31

UK to stop free migration from European Union member states to the country right after the likely no-deal Brexit on October 31, the British government has stated.

Riga city elects new mayor – Oļegs Burovs – and restores decade-old coalition

The Riga City Council has elected Oļegs Burovs as the new mayor, ending two months of political discussions and restoring the coalition that has ruled in the Latvian capital for ten years.

EU: Rīgas satiksme cuts Latvian budget fiscal room in 2020 by 72 mln EUR

The Riga city company Rīgas satiksme should, according to European Union criteria, be in included in the general government sector, thus it would cut the fiscal space of the 2020 Latvian state budget by 72 million euros, Finance Ministry stated.