Lithuania

Last updated: 08/04/2014


CENTRAL AUTHORITY FOR REPORTING

Financial Crime Investigation Serviceunder the Ministry of the Interior of the Republic of Lithuania (hereinafter - the “FCIS”). The Service is a member of the EGMONT group.

The mission of the FCIS,operating under the Ministry of Interior of the Republic of Lithuania, is to protect Lithuania’s financial system, ensuring the disclosure, investigation and prevention of crimes and other offences against the financial system, as well as other related offences.

The exact functions and authorities of the FCIS are described in Article 5 and Article 7 of the Law on the Prevention of Money Laundering and Terrorist Financing(as amended from 1/1/2012; hereafter – the “AML Law”).


ANTI-MONEY LAUNDERING REGULATOR(S)

Article 3 of the AML Law lists the institutions responsible for the prevention of money laundering and/or terrorist financing. These include:


ARE LAWYERS COVERED BY ANTI-MONEY LAUNDERING LEGISLATION?

Yes.


HAS THE THIRD EU MONEY LAUNDERING DIRECTIVE BEEN IMPLEMENTED? IF NOT, WHEN IS IT EXPECTED TO BE IMPLEMENTED?

The Third Directive was fully implemented in Lithuania through the AML Law, with last amendments as of 31 December 2011.


LIST THE LAWS REGARDING ANTI-MONEY LAUNDERING, INDICATING WHICH LAWS ARE APPLICABLE TO LAWYERS 

The anti-money laundering laws applicable to the lawyers in Lithuania are the following:

The secondary legislation on anti-money laundering applicable to the lawyers:

Order for proper implementation of international sanctions in the regulation sphere of the Financial Crime Investigation Service under the Ministry of the Interior of the Republic of Lithuania(adopted by the Director of FCIS, as amended from 24/02/2014).


ARE VISITING LAWYERS SUBJECT TO LOCAL LAWS REGARDING ANTI-MONEY LAUNDERING, AND, IF SO, TO WHAT EXTENT?

Foreign lawyers from EU member states who arrive to Lithuania under the right of the free movement of workers and provide legal services there are under the obligation to act according to the laws and legal acts of the Republic of Lithuania (and also to the laws of the EU member state where they reside) to the same extent as the Lithuanian lawyers do. It they fail to fulfil their statutory AML duties, foreign lawyers become liable for their actions, including being subject to disciplinary actions by the Lithuanian Bar Association.

The provisions on anti-money laundering are applicable to all advocates and advocates’ assistants, when they are:

1.     acting on behalf of and for the customer;

2.     assisting the customer in the planning or execution of transactions, concerning:

a.     the buying or selling of real property or business entities;

b.    the managing of customer money, securities or other assets;

c.     the opening or management of bank, savings or securities accounts;

d.    the organisation of contributions necessary for the creation, transaction or management of legal persons companies or other organisations;

e.     other services related to the mentioned above (from point a to point d).

The financial institutions performing a monetary operation must submit to the FCIS data confirming the customer’s identity and information about the performed monetary operation, if the total amount of the customer’s single operation in cash or of several interrelated operations in cash exceeds EUR 15.000 or the corresponding amount in foreign currency. A financial institution may refrain from submitting to the FCIS this information, if the customer’s activity is characterised by large-scale ongoing permanent and regular monetary operations. Nevertheless, if their customer is an undertaking of a foreign state,a branch or representative office thereof or provides legal advice or is a practicing advocate (not necessarily foreign), the obligation still applies, even though his activities would be characterised by a large-scale ongoing permanent and regular monetary operations. 


LIST ANY MONEY LAUNDERING GUIDANCE FOR LAWYERS (FOR EXAMPLE, LAW SOCIETY OR BAR ASSOCIATION GUIDELINES) CURRENTLY IN PLACE.

Guidance can be found in the ‘Rules on the prevention of money laundering and terrorist financing’, adopted by the Lithuanian Bar Association on 2nd July 2009 and applicable as of the 1st of August, 2009.


IS THE LAW SOCIETY/BAR ASSOCIATION INVOLVED IN SUPERVISING OR ENFORCING COMPLIANCE WITH ANTI-MONEY LAUNDERING REGULATIONS?

The Lithuanian Bar Association approved instructions for advocates and advocates’ assistants aimed at preventing money laundering and/or terrorist financing. In this regard the Bar supervises the activities of advocates and advocates’ assistants and consults the advocates and advocates’ assistants on the issues relating to the implementation of the instructions.

The Council of the Lithuanian Bar Association is responsible for implementing any measures against money laundering. It appoints the officer who might prescribe in writing obligatory measures to any advocate or advocate’s assistant.

Once advocates or advocates’ assistants establish that their client performs a suspicious monetary operation or transaction must suspend the performance of the operation or transaction and report it to the Bar Association within three working hours. This is regardless of the amount of money received or paid by the client in relation to the transaction.

The Lithuanian Bar Association must keep a record of the suspicious and unusual transactions performed by clients they have been notified about. It shall guarantee safety of the data kept in the register and shall protect it from being destroyed, modified, and used unlawfully. The Financial Crime Investigation Service inspects administration of the register.

The Lithuanian Bar Association shall approve the criteria for attributes of the financial operation or the transaction to be suspicious or unusual and coordinate with the Financial Crime Investigation Service (not approved yet). 


DESCRIBE CLIENT DUE DILIGENCE REQUIREMENTS, INCLUDING WHEN IT MUST BE UNDERTAKEN BY LAWYERS.

The advocates and their assistants are to follow the obligations under the general regulation of prevention of money laundering except in the cases where the laws exclude them from these obligations. The common requirements are listed below.

The AML covered subjects are obliged to take all the measures to identify the customer and the beneficial owner:

  1. when establishing a business relationship;
  2. when carrying out monetary operations or concluding transactions amounting to more than EUR 15.000 or the corresponding amount in foreign currency, whether the operation is carried out in a single transaction or in several transactions which appear to be linked, except in cases when the identity of the customer and beneficial owner has already been established
  3. when exchanging cash where the amount exchanged exceeds EUR 6.000 or its corresponding amount in foreign currency;
  4. when performing internal and international remittance transfer services, where the sum of money sent or received exceeds EUR 600 or its corresponding amount in foreign currency;
  5. performing and accepting remittance transfers in compliance with the provisions of Regulation (EC) No 1781/2006 of the European Parliament and of the Council of 15 November 2006 on information on the payer accompanying transfers of funds;
  6. when there are doubts about the veracity or authenticity of the identification details previously obtained from the customer or beneficial owners;
  7. in any other case where there are suspicions that the activities of money laundering and/or terrorist financing is, has been or will be performed.

The AML covered subjects must take all necessary and proportionate measures in order to establish whether the customer is operating on his own behalf. If he/she is not, then the obligated entity must identify the true person standing behind the transaction.

It shall be prohibited to perform the operations 1 to 4 mentioned above if:

  1. the customer does not submit the documents confirming his/her identity,
  2. the customer does not submit all the data or the data is incorrect,
  3. the customer or his/her representative avoids submitting the data required for establishing his identity, conceals the identity of the beneficial owner or avoids submitting the information required for establishing the identity of the beneficial owner or the submitted data is insufficient for that.

In all cases when the identity of the customer and the beneficial owner is established, the information about the purpose of the customer business relationship and its intended character shall be obtained and the customer’s and beneficial owner’s identity verified. This shall be done by using information received from a reliable and independent source. Finally, the AML covered subjects shall perform ongoing monitoring of their customers’ business relationships.

Advocates and advocates’ assistants are prohibited from notifying the client or any other persons about the submission of information to the FICS or Bar Association. The prohibition shall not cover the advocates and advocates’ assistants, when they attempt to convince the client not to pursue an illegitimate activity.


DOES YOUR COUNTRY FOLLOW A RISK-BASED APPROACH TO CLIENT DUE DILIGENCE BY LAWYERS?

Yes. The AML Law provides that a risk-based approach (RBA) shall be followed by financial institutions and the obligated institutions when performing client due diligence. This involves:

  • determining the beneficial owner of the transaction or the operation including obligation to verify information;
  • performing ongoing monitoring;
  • collecting information about customers’ business relations.

Lawyers are in principle covered by those provisions. However, they may be excluded from following RBA in particular situations regulated in separate legal acts.


ARE THERE ENHANCED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, POLITICALLY EXPOSED PERSONS?

Yes. The AML Law specifies that enhanced customer due diligence (EDD) shall be performed to verify their identity:

1)     when the transactions or business relationship are performed through the representative or the customer does not participate in verifying his identity;

2)     when the cross-border correspondent banking relationship is performed with third country credit institutions;

3)     when transactions or business relationship are performed with the politically exposed natural persons (PEPs);

4)     where there is a great threat of money laundering and/or terrorist financing.

When applying customer due diligence in cases 1 and 4 mentioned above, the obligated subjects must apply one or several additional measures listed below:

1)     use additional data, documents and information to identify a customer;

2)     take supplementary measures to verify or certify the supplied documents or requiring confirmatory certification by the financial institution;

3)     ensure that the first payment is carried out through an account opened in the customer’s name in a given credit institution.

With regard to PEPs, the obligated subjects must also:

1)       receive the approval of the authorised manager to conclude business relationship with such customers;

2)       take appropriate measures to establish the source of property and funds connected with the business relationship or transaction;

3)       perform enhanced ongoing monitoring of the business relationship of politically exposed natural persons.


ARE THERE SIMPLIFIED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, LISTED COMPANIES?

Under Article 10 of the AML Law simplified due diligence (SDD) shall be applied in respect of:

1)     companies whose securities are admitted trading on a regulated market in one or more EU states, and other companies from third countries whose securities are traded in regulated markets and which are subject to disclosure requirements consistent with EU legislation;

2)     beneficial owners of joint accounts held by notaries and other legal professionals from the EU states or from third countries, provided that they are subject to requirements to combat money laundering and/or terrorist financing consistent with international standards and are supervised by competent authorities for compliance with those requirements and provided that the information on the identity of the beneficial owner is available, on request, to the financial institutions which have such joint accounts;

3)     life insurance policies where the annual premium is no more than EUR 1.000 or the single premium is no more than EUR 2.500 or the corresponding amount in foreign currency;

4)     insurance policies for pension schemes if there is no surrender clause and the policy cannot be used as collateral;

5)     a pension, superannuation or similar scheme that provides retirement benefits to employees, where contributions are made by way of deduction from wages and the scheme rules do not permit the assignment of a member’s interest under the scheme;

6)     electronic money, where, if the device cannot be recharged, the maximum amount stored in the device is no more than EUR 250, or the corresponding amount in foreign currency, or where, if the device can be recharged, a limit of EUR 2.500, or the corresponding amount in foreign currency, is imposed on the total amount transacted in a calendar year, except when an amount of EUR 1.000, or the corresponding amount in foreign currency, or more is redeemed in that same calendar year by the bearer;

7)     any customer, if the customer is a financial institution covered by this Law, or a financial institution registered in another EU state or in a third country which sets the requirements equivalent to those of this Law, and monitored by competent authorities for compliance with these requirements;

8)     obligated entities to choose from and use only some of the measures foreseen for the verification of the identity.

SDD allows the obligated subjects to choose from and use only some of the measures foreseen for the verification of the identity.


ARE LAWYERS PERMITTED TO RELY ON THIRD PARTY DUE DILIGENCE? IF YES, PLEASE DESCRIBE.

The subjects of prevention of money laundering may use information supplied by third parties regarding a customer or a beneficial. When identifying or verifying the identity of a customer and/or beneficial owner without his direct participation, the subjects of prevention of money laundering are allowed to use information from financial institutions and other entities or their representations abroad when they comply with the requirements set out for third parties.

The third party shall comply to these requirements if:

  • it is under a mandatory professional registration, recognised by law;
  • it is subject to the same or similar requirements for the verification of the customer’s and beneficial owner’s identity and the storage of information.

When requested, the third party must immediately submit to the requesting subject all the requested information documents and data which must be kept by them according to the requirements on prevention of money laundering. The liability for non-compliance with the customer’s or beneficial owner’s identification requirements shall, however, rest with the financial institutions or other entities which have made use of the third country information about the customer or the beneficial owner.

These provisions are not applicable to providers of outsourcing, intermediary and representation service, if under the contract, the provider is to be considered a part of the financial institution or other entity (legal person).


WHEN IS A LAWYER UNDER AN OBLIGATION TO REPORT SUSPICIOUS TRANSACTIONS?

Advocates or advocates’ assistants having established that their customer performs a suspicious monetary operation or transaction, must suspend that operation or transaction and not later than within 3 working hours report about the operation or transaction to the Lithuanian Bar Association, regardless of the amount of money received or paid by the customer under the transaction. Advocates or advocates’ assistants having received information that their customer is intending or is trying to perform suspicious monetary operation or transaction, must immediately report to the Lithuanian Bar Association.

Within no more than 3 working hours since the receipt, the Lithuanian Bar Association must transmit that information to the FICS.


DOES ATTORNEY/CLIENT PRIVILEGE AND/OR DUTIES OF CONFIDENTIALITY PROVIDE A DEFENCE OR PARTIAL/TOTAL EXCEPTION TO THE REQUIREMENT TO REPORT SUSPICIOUS TRANSACTIONS? 

The reporting requirement is not applicable to advocates or advocates’ assistants whenthey are assessing their client’s legal position, defending or representing the client in legal proceedingsor regarding them. Also, the reporting requirements are not applicable if advocates or advocates’ assistants engage in pre-trial consultations in preparation to court proceedings or consultations aimed at avoiding these.


DOES LOCAL LAW PROVIDE ANY CRIMINAL AND/OR CIVIL INDEMNITY TO A LAWYER WHO HAS REPORTED A SUSPICIOUS TRANSACTION?

The advocate shall not be identified with his clients or their cases. An advocate may not be summoned as a witness or to give explanations as to the circumstances which came to his knowledge in the pursuit of his professional activities. It shall also be prohibited to examine, inspect or take the advocate’s practice documents or storage files containing information related to his professional activities, examine postal items, wiretap telephone conversations, control any other information transmitted over telecommunications networks and other communications or actions, except for the cases when the advocate is suspected or accused of a criminal offence. Such permission shall cover only the documents related to the allegations or charges made against the advocate. It shall be prohibited to familiarise, overtly or covertly, with the information comprising the advocate’s professional secret and use it as evidence. The Lithuanian Bar Association must be notified of the fact that the advocate has become a suspect or a defendant or when procedural actions have been taken against him.

The advocate who has provided the Lithuanian Bar Association with information about a suspicious client or operations has the same common rights mentioned above. The advocate is not liable for his client’s money laundering activities until he is involved with these activities himself.


ONCE A SUSPICIOUS TRANSACTION REPORT HAS BEEN FILED, IS A LAWYER ALLOWED TO PROCEED WITH THE LEGAL ADVICE/TRANSACTION, AND, IF SO, MUST CONSENT FROM AUTHORITIES BE OBTAINED FIRST?

Advocates and advocates’ assistants are obliged to suspend suspicious or unusual monetary operations or transactions, still in case within 5 working days from the submission of the report they are not obligated to perform temporary restriction of ownership rights according to the procedure established by the Code of Criminal Procedure, the monetary operation or transaction must be resumed. FCIS may not give an obligatory order to suspend the monetary operation or transaction to advocates and advocate’s assistants.


IS THERE A TIPPING-OFF PROHIBITION? IF YES, PLEASE DESCRIBE.

A tipping off provision applies to each subject of the prevention of money laundering, including the Lithuanian Bar Association, advocates and their assistants, and prohibits informing a customer or any other person that information has been submitted to the FCIS. However, the prohibition does not apply to lawyers “when they attempt to convince their customer not to pursue unlawful activity.”


DESCRIBE ANY RESTRICTIONS ON ACCEPTING A NEW CLIENT

When the services are provided to a new client, the advocate or the advocate’s assistant shall identify the customer before the commencement of provision of services. If the client or the transaction is suspicious, the advocate or the advocate’s assistant shall submit the required information to the Lithuanian Bar Association.

It shall be prohibited to establish a new business relationship if:

  • a customer did not submit documents confirming his identity, or
  • information submitted by a customer is incomplete or incorrect, or
  • a customer (or his representative) avoids submitting data required for establishing his identity, conceals the identity of a beneficial owner or avoids submitting information required for establishing the identity of beneficial owner, or the data submitted is insufficient for these purposes.

Additional provisions on the restriction of legal services are set out in the Law on the Bar and also include the breach of the principles of the advocate’s practice (e.g. avoidance of conflict of interests), lack of time or experience.

There are no other restrictions on accepting new clients.


ARE THERE ONGOING MONITORING REQUIREMENTS FOR EXISTING CLIENTS? IF YES, PLEASE DESCRIBE.

The AML covered subjects are obliged to take all the measures necessary to identify the customer and the beneficial owner including when there are doubts about the veracity or authenticity of previously obtained identification data and in any other case when there are suspicions that the activities of money laundering and/or terrorist financing is, has been or will be performed.

The AML covered subjects in all cases must also perform ongoing monitoring of the customer’s business relationship, including the investigation of the transactions concluded during such relationship, seeking to ensure that the performed transactions correspond to the information possessed by financial institutions or other entities about the customer, his business and the type of risk and, where necessary, the information about the source of funds.


DESCRIBE ANY OTHER WAYS IN WHICH LAWYER’S ARE AFFECTED BY ANTI-MONEY LAUNDERING LEGISLATION.

The main ways in which lawyers are affected by anti-money laundering legislation have been described above. Law firms providing services such as tax advice, consultations on incorporation, setting up trusts or providing corporate services (separately from the advocates or advocates’ assistants firms), are subject to stricter regulations and additional obligations.


HAVE LAWYERS IN YOUR JURISDICTION BEEN IMPLICATED IN MONEY LAUNDERING, INCLUDING ANY TYPE OF COMPLAINT, ARREST OR PROSECUTION?

No information available.


HAS THE FINANCIAL ACTION TASK FORCE (FATF) CONDUCTED A MUTUAL EVALUATION OF THIS COUNTRY, AND, IF SO, WHAT WERE THE FINDINGS CONCERNING LAWYERS’ COMPLIANCE WITH THE FATF 40+9 RECOMMENDATIONS?

On 5th December 2012 MONEYVALadopted evaluation Report on Fourth Assessment Visit. This report summarized the major anti-money laundering and counter-terrorist financing measures (AML/CFT) that were in place in Lithuania at the time of the 4th on-site visit to Vilnius (from 23rd to 28th April 2012). It described and analysed measures (including those regarding lawyers – advocates and advocate assistants), offering recommendations on how to strengthen certain aspects of the system.

In regard to advocates and advocate’ assistants, evaluators noted that:

  1. access to information held by lawyers for the purposes of the FCIS work needs to be reviewed;
  2. legal privileges provided in AML Law (reporting exemptions) for advocates and advocate’s assistants needs to be reviewed and clarified as well;
  3. the completeness of the record-keeping requirements for the advocates has to be reconsidered;
  4. changes for more appropriate co-operation form between the FCIS and the Lithuanian Bar Association has to be made (given that suspicious transaction reports are sent by advocates and advocate’ assistants to the Lithuanian Bar Associationwhich is the only self-regulatory organisation);
  5. AML Law shall be amended to remove the exemptions provided to advocates and advocate’s assistants in relation to internal control procedures, training of employees and the appointing of an employee at management level responsible for organising the implementation of measures for the prevention of money laundering and financing terrorist;
  6. the FCIS should also ensure that supervisory authorities and self-regulatory organisations entrusted with supervisory functions are actually aware of their supervisory function and that the supervisory function can be carried out without any legal limitations, as in the case of advocates and advocate’s assistants (on the whole, the Lithuanian supervisory authorities need to have a more proactive role in this respect).

It was also pointed out that company service providers, as a distinct category of professionals, are a particular source of concern especially since this category of professionals and the actual services they provide, as well as just the number of entities concerned, is unknown. The report also showed that the broad privileges enjoyed by advocates, and the absence of requirements for internal AML/CFT procedures adds to the risks to which Lithuania is currently exposed that these various professions are misused for shielding the activities of criminals. The evaluators have gathered several concrete illustrations on site showing that these risks are real. At the same time, official risk assessments have not been carried out in Lithuania concerning risks associated with certain sectors and/or the evolution of services.

The evaluators stated that reporting regime as regards designated non-financial businesses and professions is such that it requires urgent measures by the supervisors to make it effective. As shows the report several supervisors exist for the various designated non-financial businesses and professions and the FCIS retains overall responsibility in this area. However, supervision is weak and supervisors themselves – especially self- regulatory bodies - sometimes are not aware of their responsibilities and duties in this area.

The authorities (nor the Government, nor FICS) till now have made no relevant changes in AML Law and other regulations as it was proposed by evaluators. However it is expected that recommendations and observations of this last MONEYVAL report on Lithuania will be reconsidered till the end of year 2014.



Information provided by:

Laimonas Marcinkevicius
Attorney at Law
Juridicon Law Firm
Totoriu St. 5-7
LT-01121 Vilnius
Lithuania

www.juridicon.lt