FAQ

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Is the monitoring of the customer’s business relationship continuous?

Pursuant to the provisions of Article 9(16) of the Republic of Lithuania Law on Prevention of Money Laundering and Terrorist Financing, virtual currency wallet operators and virtual currency exchange operators must, in all cases, carry out ongoing monitoring of the customer’s business relationship, including an investigation of the transactions entered into in the course of that relationship, in order to ensure that the transactions entered into are consistent with the information available to the virtual currency wallet operators and virtual currency exchange operators about the customer, his business, his risk profile and the source of funds.

Who supervises the activities of virtual currency exchange operators and/or depositary virtual currency wallet operators in the Republic of Lithuania?

The activities of virtual currency exchange operators and/or depositary virtual currency wallet operators in relation to the prevention of money laundering and/or terrorist financing shall be supervised by the Office.

The Office also approves instructions to virtual currency exchange operators and/or depository virtual currency operators aimed at preventing money laundering and/or terrorist financing, and the officials of the Service's Money Laundering Prevention Board provide methodological assistance to obliged entities on the implementation of the measures for the prevention of money laundering and/or terrorist financing laid down in the Law on the Prevention of Money Laundering and Terrorist Financing.

If you have any questions regarding the implementation of the measures to prevent money laundering and/or terrorist financing, you can contact the Office by e-mail at [email protected].

The generalised requirements for operators of virtual currency exchanges and/or depository virtual wallets can be found on the website of the Service.

What evidence is appropriate for a VASP to prove the maintenance of EUR 125,000 in equity?

Persons who have commenced activities as a virtual currency exchange operator and/or as a depository virtual currency wallet operator by 31 July 2024 and continue to do so as from 1 August 2024 are under an obligation to inform the Service by 31 August 2024 of their compliance with the requirement to maintain at all times, as from 1 August 2024, an equity capital of at least EUR 125 000 by submitting evidence of compliance with that requirement.

Please note that the Act does not provide for a list of documents to be submitted to the Service, and therefore the legal person should responsibly assess which documents confirm that the undertaking complies with the requirements of the Act. The most appropriate evidence should be:

- Interim financial statements for the first half of 2024 submitted to the State Enterprise Centre of Registers;

- a copy of the general ledger of the accounting software used on or after 30 June 2024;

- the company's monthly cash inventory report for the months of June-July 2024;

- a bank statement showing a cash balance of at least EUR 125 000 on 1 August 2024;

- etc.

It should be noted that the mere submission to the Service of data such as an account statement from a financial institution or a certificate on the formation of the company's authorised capital of EUR 125 000 does not constitute adequate evidence under the requirement of Article 25(6)(1)(a) of the Law on the Prevention of Money Laundering and Terrorism Financing.

Documents and information must be submitted to the Service by e-mail to [email protected].

We remind you that virtual currency operators who do not comply with the requirement to maintain equity capital of at least EUR 125 000 on a permanent basis as from 1 August 2024 by 31 August 2024 and/or to maintain equity capital of at least EUR 125 000 on a permanent basis by 31 August 2024 will be subject to the following fails to provide the Service with evidence of compliance with the requirement, they will lose the right to continue to carry out the activities of virtual currency operators in the Republic of Lithuania from 1 September 2024.

Do international sanctions impose restrictions on Russian citizens or natural persons residing in Russia or legal persons, entities or bodies established in Russia in relation to cryptoservices?

In accordance with Article 5b(2) of Council Regulation (EU) No 833/2014 of 31 July 2014 concerning restrictive measures in view of the actions of Russia in destabilising the situation in Ukraine (hereinafter - the Regulation), the provision of cryptocurrency wallet, account management or custody services to Russian citizens or natural persons residing in Russia or to legal persons, entities or organisations established in Russia is prohibited.

It shall be prohibited, as from 18 January 2024, to authorise, directly or indirectly, Russian nationals or natural persons residing in Russia to hold any position of direct or indirect control or influence on the management bodies of a legal person, entity or body established or registered under the law of a Member State and providing the services referred to in paragraph 2 (Article 5b(2a) of the Regulation).

Paragraphs 1, 2 and 2a do not apply to nationals of a Member State, a Member State of the European Economic Area or Switzerland, or to natural persons holding a temporary or permanent residence permit in a Member State, a Member State of the European Economic Area or Switzerland (Article 5b (3) of the Regulation).

What are the requirements for a member of the management, supervisory bodies, beneficiary of a virtual currency exchange operator and a depositary virtual currency wallet operator?

Pursuant to Article 25(3)(1) of the Republic of Lithuania Law on Prevention of Money Laundering and Terrorist Financing (hereinafter - the Law), a natural person cannot be a member of the management, supervisory bodies, or a beneficiary of a virtual currency exchange operator and a depositary virtual currency wallet operator, if he/she is:

(1) found guilty of having committed a serious or very serious offence under the Criminal Code of the Republic of Lithuania or an offence corresponding to any of these offences under the criminal laws of other states, regardless of whether the person’s criminal record has expired or been expunged;

(2) has been found guilty of having committed a minor or a less serious crime provided for in the Criminal Code against property, property rights and property interests, economy and business order, financial system, civil service and public interests, public security, or an offence corresponding to any of these crimes according to the criminal laws of other countries, and five years have not elapsed since the expiry or revocation of the person’s conviction;

(3) has been found guilty of a criminal offence other than those referred to in points 1 and 2 of this paragraph, provided for in the Criminal Code or in the criminal laws of other States, and 3 years have not elapsed since the date of serving the sentence, the suspension of the execution of the sentence or the release from serving the sentence.

We note that the Service assesses the good repute of the members of the management and supervisory bodies and the beneficiaries each time it carries out inspections of a virtual currency exchange operator or a depository virtual currency wallet operator.

Where can I submit a notification to the Authority in relation to virtual currency exchange transactions or transactions in virtual currency where the value of such monetary transaction or transaction equals or exceeds 15,000 EUR or equivalent amount in a foreign or virtual currency?

Information to the Service on virtual currency exchange operations or transactions in virtual currency, if the value of such monetary operation or transaction equals or exceeds 15 000 EUR, must be submitted by logging on to the information system of the Service and filling in the relevant notification form, or submit the information in xml format (as a file).

The Service does not have a model form for the submission of information on suspicious transactions, but the form available in the system of the Service can be used, as the information is filled in the tables already created.

Once you are logged in to the information system of the Service, you will find a user guide detailing the process of submitting information to the Service. You must follow the description of information submission.

Does the Service register virtual currency exchange operators and/or depositary virtual currency wallet operators?

Please note that the Service is not responsible for the registration of virtual currency exchange operators and/or depository virtual currency operators.

The activities of virtual currency exchange operators and/or depository virtual currency wallet operators in relation to the prevention of money laundering and/or terrorist financing shall be supervised by the Service. The Service also approves instructions to virtual currency exchange operators and depository virtual currency operators aimed at preventing money laundering and/or terrorist financing, and the officials of the Money Laundering Prevention Board of the Service provide methodological assistance to obliged entities on the implementation of measures for the prevention of money laundering and/or terrorist financing laid down in the Republic of Lithuania Law on the Prevention of Money Laundering and Terrorist Financing (hereinafter - the Law).

The requirements for legal persons and persons associated with providers of virtual currency exchanges, depositary virtual currency wallet operators are regulated in Article 25 of the Law.

A legal person which has commenced or ceased to carry on the business of a virtual currency exchange operator or a depositary virtual currency wallet operator shall, not later than 5 working days after the commencement or cessation of the business, inform the Registrar of Legal Persons of the commencement or cessation of the business of a virtual currency exchange operator or a depository virtual currency wallet operator. By providing this information, the operator of a virtual currency exchange or a depository virtual currency wallet operator confirms that it or the members and beneficiaries of its management or supervisory bodies are aware of and comply with the legislation on money laundering and the prevention of the financing of terrorism (Art. 25(4) of the Law).

Does the Service provide clarifications on MICA (Markets in Crypto-Assets Regulation)?

Pursuant to Article 4(9) of the Republic of Lithuania Law on Prevention of Money Laundering and Terrorist Financing (hereinafter - the Law), the Service shall approve instructions to entities other than those referred to in paragraphs 1-8 of this Article aimed at preventing money laundering and/or terrorist financing, supervise the activities of financial institutions and other obliged entities in relation to prevention of money laundering and/or terrorist financing, and shall provide them with methodological support.

In view of the above, the Service is not empowered by its competence to provide methodological assistance on the implementation of the MICA Regulation.

Does the obliged entity have to identify the purpose for which the customer opens the account?

We note that obliged entities must establish appropriate internal policies and internal control procedures relating to, inter alia, the commencement/termination of business relationships, identification and verification of customers and beneficiaries, risk assessment, risk management, organisation of monitoring of business relationships and/or transactions, determination of suspiciousness of operations or transactions, submission of notifications and information to the Service, etc. (Article 2(14) of the Republic of Lithuania Law on the Prevention of Money Laundering and Terrorist Financing (hereinafter - the Law).

Thus, financial institutions and obliged entities adopt individual decisions on compliance with AML/CFT requirements on a case-by-case basis, taking into account all known and relevant circumstances, in accordance with the established internal policies and internal control procedures, and taking into account the legal provisions in force at the time.

As a reminder, Article 9(12) of the Law states that in all cases where the identity of the customer is established, financial institutions and other obliged entities shall take all appropriate, targeted and proportionate measures to establish whether the customer is acting on his/her own behalf or under his/her own control and to establish the identity of the beneficiary, and, if the customer is acting through an agent, then also the identity of the customer’s agent. Financial institutions and other obliged entities must, in the course of establishing the identity of the customer and the beneficiary, request from them documents and other data which enable financial institutions and other obliged entities to understand the ownership and control structure and the nature of the activities of the customer, which is a legal person (Article 9(13) of the Law).

In all cases where the identity of the customer and the beneficiary is established, financial institutions and other obliged entities must obtain information from the customer about the purpose and intended nature of the customer’s business relationship (Article 9(14) of the Law).

When must a customer be identified?

Pursuant to the provisions of Article 9(1)(1) of the Republic of Lithuania Law on the Prevention of Money Laundering and Terrorist Financing (hereinafter - the Law), virtual currency exchange operators and operators of depositary virtual currency wallets must take measures to identify and verify the identity of the customer and the beneficiary before entering into business relations.

The provisions of Article 9(1)(6) of the Law require that the identity of the customer and the beneficiary must be established and verified prior to the execution of a virtual currency exchange operation or a virtual currency transaction in funds equal to or in excess of 1 000 EUR or the equivalent amount in foreign or virtual currency, or before depositing in or withdrawing from a virtual currency wallet virtual currency in an amount equal to or exceeding 1 000 EUR or its equivalent in foreign or virtual currency, whether the transaction is a single transaction or a series of interrelated transactions, unless the identity of the customer and the beneficiary has already been established.

Pursuant to the provisions of Article 19(13)(1) of the Law, virtual currency exchange operators and operators of depositary virtual currency wallets shall keep information which allows the address of the virtual currency to be linked to the identity of the holder of the virtual currency for the period of time set out in Article 19(10) of the Law.

Are crypto service providers required to keep logbooks?

Yes, operators of virtual currency exchanges and operators of depositary virtual currency wallets are required to keep logs of monetary transactions made by a customer for an amount equal to or exceeding 1 000 EUR or its equivalent in foreign or virtual currency.

Similarly, operators of virtual currency exchanges and operators of depository virtual currency wallets, in implementing the requirements for the prevention of money laundering and terrorist financing, are required to adopt in their internal policies and internal control procedures requirements for the written formats of and procedures for the completion of cash transaction, transaction and customer logs.

Pursuant to the provisions of Article 19(13)(1) of the Republic of Lithuania Law on Prevention of Money Laundering and Terrorist Financing, operators of virtual currency exchanges and operators of depository virtual currency wallets must store information which allows the address of the virtual currency to be linked to the identity of the owner of the virtual currency for the period of time set out in Paragraph (10) of the said Article.

What is the meaning of “equity”?

The composition of the equity capital of joint-stock companies and private limited liability companies is specified in Article 38 of the Law on Joint-Stock Companies of the Republic of Lithuania, which states that the equity capital of a company consists of:

the amount of paid-up share capital;
share premium (excess of the nominal value of the shares);
revaluation reserve;
) a mandatory reserve;
reserve for the acquisition of own shares;
the share premium reserve;
other reserves;

retained earnings - profit (loss).

What are the rules governing the Travel Rule?

As of 30 December 2024, Article 9(16(1)-16(3) of the Law on Prevention of Money Laundering and Terrorist Financing of the Republic of Lithuania shall cease to apply.

For the implementation of the Travel Rule from 30 December 2024, the deadline for compliance is 31 May 2023. Regulation (EU) 2023/1113 of the European Parliament and of the Council on information to be provided when transferring funds and certain cryptocurrencies and amending Directive (EU) 2015/849

(https://eur-lex.europa.eu/legal-content/LT/TXT/?uri=CELEX%3A32023R1113).

Where can I find information on licensing cryptocurrency service providers?

The Bank of Lithuania is responsible for the licensing of cryptocurrency service providers under the Markets in Crypto-Assets Regulation (MICA), and the Bank of Lithuania may also interpret the provisions of MICA.

Information on the licensing of cryptocurrency service providers can be found on the Bank of Lithuania’s website - https://www.lb.lt/lt/kriptoturto-paslaugu-teikeiu-licenciiavimas

What are the requirements for the authorised capital of virtual currency exchange operators and depositary virtual currency wallet operators?

The new provision on share capital in the Law on Prevention of Money Laundering and Terrorist Financing of the Republic of Lithuania (the “Law”) entered into force on 1 August 2024. A legal person established in the Republic of Lithuania intending to carry out or carrying out the activities of a virtual currency exchange operator and/or a depository virtual currency wallet operator must:

a public limited company or private limited company:

have a registered and paid-up share capital of at least 125 000 EUR and maintain at all times an equity capital of at least 125 000 EUR;
at the time of incorporation and increase of the authorised capital, the funds constituting the authorised capital shall be deposited in a credit institution of the Republic of Lithuania or in a credit institution of a Member State of the European Union with a branch in the Republic of Lithuania;

a legal person established in the Republic of Lithuania in another legal form, or a branch of a legal person of a Member State of the European Union or a foreign state, to have, for the entire period of its activity, a surety bond issued by an insurance company or a surety or guarantee document issued by a financial institution for an amount of at least 100 000 EUR per customer claim for indemnity, and for an amount of 500 000 EUR per annum in respect of all customer claims for indemnity.

Article 25(6)(1)(a) of the Law applies to legal persons carrying on business and newly established as of 1 August 2024 (to have a registered and paid-up share capital of at least 125 000 EUR and to maintain at all times a shareholders’ equity of at least 125 000 EUR).

Article 25(6)(1)(b) of the Law shall apply as of 1 August 2024 to a newly established legal person that plans to carry out the activities of a virtual currency exchange operator and/or a depository virtual currency wallet operator (the funds shall be deposited in an account with a credit institution of the Republic of Lithuania or a credit institution of a Member State of the European Union with a branch in the Republic of Lithuania).

Legal entities carrying out business activities may also pay the authorised capital into the accounts currently opened, but in order to increase the authorised capital, from 1 August 2024, the funds forming the authorised capital must be deposited into an account with a credit institution of the Republic of Lithuania or with a credit institution of a Member State of the European Union with a branch in the Republic of Lithuania.

Is it necessary to inform the Service of the commencement/termination of the activities of virtual currency exchange operators and/or depositary virtual currency wallet operators?

Article 25(4) of the Republic of Lithuania Law on the Prevention of Money Laundering and Terrorist Financing stipulates that a legal person that has commenced or ceased to carry out the activities of a virtual currency exchange operator and/or a depository virtual currency wallet operator shall, not later than within 5 working days from the commencement or cessation of the activities, inform the Registrar of Legal Persons of the commencement or cessation of the activities of a virtual currency exchange operator or a depository virtual currency wallet operator service provider.

Thus, in this case, the commencement/termination of the activity does not need to be notified to the Service.

What staff must a virtual currency exchange operator and/or a depositary virtual currency wallet operator have?

Article 25(5) of the Republic of Lithuania Law on the Prevention of Money Laundering and Terrorist Financing (hereinafter - the Law) stipulates that a legal person that has commenced the activity of a virtual currency exchange operator and/or a depository virtual currency wallet operator must have a senior manager who is a permanent resident of Lithuania, as defined under the Law on Income Tax of the Republic of Lithuania on personal income.

A senior manager is an official or employee of a sufficiently senior position who has sufficient knowledge of the risks of money laundering and/or terrorist financing posed to the institution or undertaking and is responsible for taking decisions that may affect the risks posed (Article 2(23) of the Law).

Pursuant to Article 25(7) of the Law, the managerial staff of a VCC operator and/or a depository virtual currency wallet operator appointed pursuant to Article 22(1) may not represent more than one VCC operator and/or depository virtual currency wallet operator at the same time, unless those operators belong to the same group of undertakings.

Order of the Director of the Authority of 10 January 2020 No. Paragraph 34 of the Instructions for Depository Virtual Currency Wallet Operators and Virtual Currency Exchange Operators to Prevent Money Laundering and/or Terrorist Financing (hereinafter the "Instructions"), approved by the Office of the Superintendent of the European Central Bank (the "Office") on 31 January 2020 (the "Instructions"), stipulates that a Depository Virtual Currency Wallet Operator and a Virtual Currency Exchange Operator shall appoint a senior manager to organise the implementation of the measures for the prevention of money laundering and the prevention of terrorist financing, and to maintain communication with the Office.

Where the depositary virtual currency wallet operator and the virtual currency exchange operator are managed by a board of directors, the depositary virtual currency wallet operator and the virtual currency exchange operator must appoint a member of the board of directors to organise the implementation of the measures for the prevention of money laundering and/or terrorist financing laid down in the Act and senior staff to liaise with the Service.

The operator of a depository virtual currency wallet and the operator of a virtual currency exchange must notify the Service of the appointment/change of these employees in writing (by email to [email protected]), providing the details and contact information (email address, telephone number) of the appointed/changed employees.

Is there no restriction on a legal person carrying on the activities of a virtual currency exchange operator and/or a depository virtual currency wallet operator from carrying on other economic commercial activities (e.g. wholesale trade which does not involve the use of virtual currencies) with undertakings in other European countries?

The Republic of Lithuania Law on Prevention of Money Laundering and Terrorist Financing ("the Law") does not prohibit entities operating as virtual currency exchange operators and/or depository virtual currency wallet operators from carrying out other types of economic commercial activities, but such activities must be unrestricted by the laws of the Republic of Lithuania and must comply with the requirements thereof.

However, we recall that Article 25(8) of the Law provides for a mandatory requirement that a virtual currency exchange operator and/or a depository virtual currency wallet operator must not carry out activities or provide services in another state to such an extent that only functions or services which are not essential by the nature of their activity remain in the Republic of Lithuania and are performed or provided exclusively to customers of another state or, as a matter of fact, they cease to carry out activities in the Republic of Lithuania.

This requirement of the Law was aimed at ensuring that providers of cryptocurrency-related services provide their services in such a way that they do not end up providing functions or services in the Republic of Lithuania that are not essential to the nature of their business or that they cease to carry out their business activities in the Republic of Lithuania in general. The aim was to avoid the perverse practice where Lithuania might be considered as a country of offshore establishment only, while cryptocurrency-related service providers would be operating in other countries, thus avoiding stricter establishment regulation and regulatory arbitrage, but leaving the reputational risk of money laundering and terrorist financing to Lithuania. The aim of this provision was to ensure that the established company would have a real connection to Lithuania and would be accountable to Lithuanian supervisory and control authorities. It should be noted that this provision does not prohibit the exercise of activities and the provision of services both in the European Union and in other foreign states.

Can the Service issue a license for virtual currency exchange operators/depository virtual currency wallet operators?

The activities of virtual currency exchange operators and depositary virtual currency wallet operators are not licensed in the Republic of Lithuania.

However, they are obliged to comply with the requirements set out in the Republic of Lithuania Law on Prevention of Money Laundering and Terrorist Financing. The codified requirements can be found on the website of the Service.

How is it possible find out whether a legal entity in the Republic of Lithuania carries out the activities of virtual currency exchange operators and/or depository virtual currency wallet operators?

The lists of legal entities established in the Republic of Lithuania and branches of a legal entity of a Member State of the European Union or of a foreign state carrying out the activities of a virtual currency exchange operator and/or a depository virtual currency wallet operator shall be published on the website of the Registrar of Legal Entities (list of legal entities carrying out the activities of a virtual currency exchange operator; list of legal entities carrying out the activities of a depository virtual currency wallet operator).

Does the person designated by the operator of a depository virtual currency wallet/virtual currency exchange operator to be responsible for the implementation of anti-money laundering and anti-terrorist financing measures need to have specific training or certification?

No, no specific training or certificate of performance is required.

However, the Director of the Authority, by Order of 10 January 2020 No. Paragraph 34(2) of the Instructions to operators of Depository Virtual Currency Wallets and Virtual Currency Exchanges for the prevention of money laundering and/or terrorist financing ("the Instructions"), approved by the Office of the Director of the Security Service on 31 January 2010 (the "Instructions"), stipulates in point V-5 that the operator of a Depository Virtual Currency Wallet and the operator of a Virtual Currency Exchange shall ensure that, prior to the appointment of a manager, the following members of the board, the competence, work experience and qualifications of such persons are assessed when appointing a member of the board of directors, a senior manager and/or a person responsible for the implementation of the measures to prevent money laundering and terrorist financing in the activities of the depository virtual currency wallet operator and the virtual currency exchange operator, as provided for in the Republic of Lithuania Law on the Prevention of Money Laundering and Terrorist Financing.

In assessing the competence, experience and qualifications of such persons, account must be taken of the level and nature of the person's education, further training, the nature and duration of the professional activity or work experience, other factors that may affect the person's competence, experience and qualifications, as well as whether the person to be appointed as a manager, member of the board of directors, senior manager, and/or person responsible for the implementation of the measures to prevent money laundering and the financing of terrorism, has knowledge of risk management in relation to the implementation of measures to prevent money laundering and the financing of terrorism.

The operator of a depository virtual currency wallet and the operator of a virtual currency exchange are required to provide specialised training on AML/CFT measures to their staff, in particular to those who deal directly with customers and their transactions (point 35 of the Guidance).

An entity operating as a virtual currency exchange operator and/or as a depository virtual currency wallet operator is obliged to self-assess its compliance with the legal requirements. A self-assessment questionnaire to assist in assessing compliance with money laundering and/or terrorist financing requirements can be found in the Annex to the Guidelines.

How to determine the value of virtual currency?

In accordance with the provisions of point 27 of the Instructions to Depository Virtual Currency Wallet Operators and Virtual Currency Exchange Operators for the Prevention of Money Laundering and/or Terrorist Financing adopted by Order No V-5 of the Director of the Office of the Office of 10 January 2020, the value of a virtual currency shall be determined at the moment of execution of a monetary operation or conclusion of a transaction.

When specifying the moment of determination of the exchange rate of virtual currency in the internal policy and internal control procedures, it is suggested to take into account the letter of the State Tax Inspectorate under the Ministry of Finance of the Republic of Lithuania 'On the clarification of the tax provisions on the activities of virtual currencies and the initial distribution of virtual currency tokens'.

What form can be used to report virtual currency exchange transactions or transactions in virtual currency where the value of the monetary transaction or transaction is equal to or exceeds EUR 15 000? Is there a model form for the submission of such information?

Information to the Service on virtual currency exchange operations or transactions in virtual currency, if the value of such monetary operation or transaction is equal to or exceeds EUR 15 000, must be submitted by logging into the Office's information system and filling in the relevant notification form or by submitting the information in "xml" format (as a file).

The Service does not have a model form for the submission of information on suspicious transactions, but you can use the form available in the Office's system, as the information is filled in the tables that are already set up.

Once you have accessed the Service's information system, you will find a user manual detailing the process of submitting information to the Service. The description of the submission of information must be followed.

Practical questions concerning the submission of information or notifications to the Service, as well as problems with the Service's information system, can be addressed to the following e-mail address [email protected].

Can the manager hold a similar position in another Virtual Currency Exchange Operator and/or Depository Virtual Currency Wallet Operator?

Pursuant to Article 25(7) of the Republic of Lithuania Law on Prevention of Money Laundering and Terrorist Financing (hereinafter referred to as "the Law"), the managerial staff of a virtual currency exchange operator and/or a depositary virtual currency wallet operator appointed pursuant to Article 22(1) may not represent more than one virtual currency exchange operator and/or depositary virtual currency wallet operator at the same time, except in cases where those operators belong to the same group of companies.

Article 22(3) of the Law specifies that the concept of a group of undertakings is defined in Article 2(12) of the Law on Supplementary Supervision of Undertakings Belonging to a Financial Conglomerate of the Republic of Lithuania ("the Supervision Law"). Accordingly, a group of undertakings (hereinafter referred to as "group") shall mean a group, including all its subgroups, consisting of a parent undertaking, its subsidiaries and undertakings of which the parent undertaking or its subsidiaries are members, as well as undertakings which, although not linked by the relationships set out in paragraphs 21 and 22 of this Article, are not linked to another undertaking (other undertakings), but which are jointly controlled by virtue of a contract(s) or provision(s) in the instrument(s) of incorporation with such undertaking(s), or a majority of the members of the administrative, management or supervisory bodies of both they and the other undertaking(s) have been the same persons during the financial year preceding the date of the consolidated financial statements.

Article 2(21) of the Supervision Act states that a subsidiary is an undertaking which meets at least one of the following criteria:

(1) an undertaking in which another undertaking holds a majority of the votes of the shareholders or other participants;

(2) an undertaking in which the other undertaking, as a shareholder or participant in the first undertaking, has the right to appoint or remove a majority of the members of the administrative, management or supervisory body of that first undertaking;

(3) an undertaking over which, by virtue of the provisions of its instrument of incorporation or of agreements concluded with another undertaking, that other undertaking is in a position to exercise a determining influence;

(4) an undertaking in which the other undertaking, by virtue of agreements concluded with its shareholders or members, controls a majority of the votes of the shareholders or members of the first undertaking;

(5) an undertaking over which, in the opinion of the supervisory authority, the other undertaking effectively exercises a determining influence;

(6) an undertaking which is a subsidiary of a parent undertaking in accordance with the criteria set out in points (1) to (5) of this paragraph.

Article 2(22) of the Supervision Act states that a parent undertaking is an undertaking which meets at least one of the following criteria:

(1) the undertaking holds a majority of the votes of shareholders or other participants in another undertaking;

(2) the undertaking, as a shareholder or participant in another undertaking, has the right to appoint and remove a majority of the members of the administrative, management or supervisory body of that undertaking;

(3) the possibility for an undertaking to exercise decisive influence over another undertaking by virtue of contracts concluded with that undertaking or of provisions in the constituent instrument of that undertaking;

(4) an undertaking which, by virtue of contracts concluded with the shareholders or members of another undertaking, controls a majority of the votes of the shareholders or members of that undertaking;

(5) an undertaking which, in the opinion of the supervisory authority, has a decisive influence on another undertaking.

Thus, in answer to your question, we note that, if the undertakings you refer to fall within the definition of a group of undertakings, the managers may simultaneously represent more than one virtual currency exchange operator and/or depositary virtual currency wallet operator.

Are the instructions approved by Order No V-115 of 2 August 2023 of the Director of the Service binding on the operator of a virtual currency exchange and/or the operator of a depositary virtual currency wallet?

Pursuant to the Law of the Republic of Lithuania on Money Laundering and Terrorist Financing, financial institutions are understood as credit institutions and financial companies defined in the Law of the Republic of Lithuania on Financial Institutions, payment institutions defined in the Law of the Republic of Lithuania on Payment Institutions, electronic money institutions defined in the Law on Electronic Money and Electronic Money Institutions of the Republic of Lithuania, Currency exchange operators are defined in the Law on Currency Exchange Operators of the Republic of Lithuania, operators of crowdfunding platforms are defined in the Law on Crowdfunding of the Republic of Lithuania or 2020. October 7 Regulation (EU) 2020/1503 of the European Parliament and of the Council on European crowdfunding service providers for businesses, which amends Regulation (EU) 2017/1129 and Directive (EU) 2019/1937, defines crowdfunding service providers established in the Republic of Lithuania, Lithuania Operators of peer-to-peer lending platforms defined in the Law on Consumer Credit of the Republic and the Law on Credit Related to Real Estate of the Republic of Lithuania, insurance companies engaged in life insurance activities and insurance brokerage companies engaged in insurance mediation activities related to life insurance as defined in the Insurance Law of the Republic of Lithuania, as well as investment variable capital companies and collective investment entities intended for informed investors and management companies managing only these entities; branches of these foreign financial institutions, established in the Republic of Lithuania, as well as electronic money institutions and payment institutions, whose headquarters are in another European Union member state, providing services in the Republic of Lithuania through intermediaries, natural or legal persons (the Law of the Republic of Lithuania on the Prevention of Money Laundering and Terrorist Financing ( hereinafter - the Law) Article 2, Paragraph 7).

The concept of other obligated entities is presented in Article 2, Part 10 of the Law. Point 10 of Part 10 of this article states that operators of virtual currency exchanges are assigned to other obliged entities, and point 11 – operators of depository virtual currency wallets.

So, we will ask you about the aforementioned Director of the Service in 2023. August 2 by order no. V-115 "Regarding the approval of instructions aimed at preventing money laundering and/or terrorist financing for Financial Institutions not specified in Article 4, Part 1 of the Law on the Prevention of Money Laundering and Terrorist Financing of the Republic of Lithuania" In Article 4, Part 1 of the Law on the Prevention of Money Laundering and Terrorist Financing, the instructions aimed at preventing money laundering and/or terrorist financing are intended for companies of the Republic of Lithuania, representative offices (branches) of foreign companies, registered and operating in the Republic of Lithuania, whose main activity is the provision of financial services and which are not specified in paragraph 1 of Article 4 of the Law.

Summarizing what was stated above, we state that operators of virtual currency exchanges and operators of depository virtual currency wallets are other obligated entities in the sense of the Law, and therefore must follow the provisions of the Law and implement them.

General 2

How to contact FCIS and to inform about possible violation of law?

You can contact FCIS:

General email: dokumentas[@]fntt.lt

General phone number (8 5) 271 7594

Trust phone number (8 5) 271 6694

What is the competence of FCIS?

FCIS discloses and investigates criminal activities, detrimental to the State budget, as well as irregularities related to the receiving and use of financial support funds from EU and other countries. Criminal activities resulting in financial damage for a person are investigated by other law enforcement institutions.

International financial sanctions 23

Where can I find information about financial sanctions applied in Lithuania?

Information about international financial sanctions applied in Lithuania is provided here.

When must the payment authorization be obtained when the payment is to be made/received by a sanctioned person - before the payment order is initiated or after the payment order has been made and frozen by the bank? Who can apply for such a payment order - the sender or the recipient of funds?

The payment can be made only after receiving the permission of the competent authority, therefore the request must be submitted to the Service before initiating the payment order. The request can be submitted by both the sender of funds and the recipient of funds. After examining the application, the person who submitted the application, the bank of the sender of funds and the bank of the recipient of funds, if the authorization is related to taxes, the institution administering the tax, and other interested parties will be informed about the decision made.

Which e-mail should be used to submit a request for an exemption or permission to avoid the restrictions or obligations imposed by international sanctions?

Requests and inquiries related to international financial sanctions are submitted to the Service by general E-mail [email protected]

How many days does it take to process an exemption/authorization request?

Pursuant to Article 10(4) of the Law on Public Administration of the Republic of Lithuania, a public administration entity shall take an administrative decision on a request or complaint of a person within 20 working days from the date of receipt of such request or complaint. If the request or complaint is received after working hours, on a day of rest or on a public holiday, the day of receipt shall be deemed to be the following working day. Where, for objective reasons, an administrative decision cannot be taken within this time limit, the public administration body may extend this time limit for a maximum of 10 working days.

Does the Service issue explanations/conclusions on the application of sanctions to natural or legal persons?

Please note that Article 6 of the Law on International Sanctions of the Republic of Lithuania (hereinafter referred to as the Law) provides that international sanctions established by the resolutions of the United Nations Security Council and the legal acts of the European Union shall be implemented in the Republic of Lithuania in full and directly. The Service, within its competence for ensuring the implementation of international sanctions, decides on granting exemptions or permits to waive the restrictions and obligations specified in the legislation establishing international sanctions and carries out all the procedures necessary for that purpose.

The Service also responds to enquiries from natural and legal persons concerning the implementation in the Republic of Lithuania of the international sanctions falling within the scope of its activities (funds and economic resources), but the Service is not empowered to interpret legislation and therefore does not issue interpretations, conclusions or other documents of any kind which would take a position on the sanctions imposed on individuals. All natural and legal persons implement international sanctions independently and are responsible for their proper application, and the European Union legislation imposing restrictive measures is directly applicable. The implementation of sanctions imposed by the European Union should also take into account guidelines, best practices and other interpretations issued by the European Union.

Entities implementing international standards and recommendations may also choose to implement sanctions imposed by third countries that are not mandatory in the Republic of Lithuania (e.g., the United States of America, the United Kingdom, Canada, etc.).

A list of legal persons or other organisations without legal personality, which are owned or controlled by a sanctioned entity, is available on the website of the Service and is approved by the Service.

How is it possible to find out if a person is subject to European Union sanctions related to restrictive measures against the Russian Federation and the Republic of Belarus for aggression against Ukraine?

For up-to-date information on restrictive measures legislation adopted by the European Union, and to find out about the persons, entities and activities subject to European Union restrictive measures, please visit the EUR-lex portal.

The restrictive measures applicable to the Russian Federation and its entities are laid down in Council Regulation (EU) No 269/2014 of 17 March 2014 "concerning restrictive measures in view of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine" and Regulation (EU) No 833/2014 of 31 July 2014 "concerning restrictive measures in view of actions by Russia to destabilise the situation in Ukraine". The restrictive measures applicable to the Republic of Belarus are set out in Regulation (EC) No 765/2006 of 18 May 2006 concerning restrictive measures in view of the situation in Belarus and in view of the involvement of Belarus in the Russian aggression against Ukraine. Please note that the current version of the Regulations must be used for the purposes of the verification.

The above Regulations and their Annexes lay down the prerequisites for the application of restrictive measures (sanctions), the objects of their application and the exceptions to their application.

Please also note that in accordance with the provisions of the Law on International Sanctions of the Republic of Lithuania, all natural and legal persons are obliged to comply with and implement international sanctions implemented in the Republic of Lithuania. In the light of the above-mentioned legal regulation, it should be noted that in each case, natural and legal persons individually, after assessing all the known and relevant circumstances and taking into account the legal norms in force at the time, make decisions on the compliance of their planned activities with the requirements of the sanctions.

More information on the restrictive measures of the European Union applicable in the Republic of Lithuania, the lists of natural and legal persons subject to sanctions, can be found on the website of the Service.

Is the subject of international sanctions free to dispose of its funds and assets?

Under the current legal framework, any movement, transfer, alteration, use, access to or management of the funds of a sanctioned person (change in their amount, amount, location, ownership, possession, characteristics, destination, any other change that makes the use of the funds possible), as well as any use of the economic resources of a sanctioned person (for the acquisition of funds or goods, for the receipt of services, for the sale, lease, mortgage, pledge, other use) is prohibited.

Any use of the funds or economic resources of a sanctioned person (e.g. initiation of a payment, conclusion of a contract) without prior authorisation of the competent authority shall be prohibited in accordance with the provisions of the European Union Regulations. Any natural and/or legal person who violates international sanctions shall be held liable in accordance with the procedure established by the Law on International Sanctions of the Republic of Lithuania and other laws of the Republic of Lithuania.

Paragraph 33 of the Description of the Procedure for the Implementation of International Sanctions, approved by the Resolution of the Government of the Republic of Lithuania No 535 of 25 May 2022 "On the Implementation of the Law on International Sanctions of the Republic of Lithuania" (hereinafter referred to as the "Description"), provides that, if the legislation establishing international sanctions provides for exemptions from its implementation and/or provides that permissions may be granted to waive the limitations and obligations imposed by international sanctions, the competent authorities shall take decisions on the application of exemptions or granting permissions to waive the restrictions and obligations imposed by international sanctions. Paragraph 34 of the Regulation regulates the entities that may apply to the competent authority for an exemption or a waiver from the restrictions and obligations imposed by international sanctions; entities subject to international sanctions; and other interested persons.

The request must be reasoned and accompanied by documents supporting the factual and legal circumstances set out in the request, which shall be considered an integral part of the request (point 34 of the Regulation). Each application shall be examined individually, taking into account all the legal and factual circumstances. A decision taken following the examination of one application for exemptions or for the granting of exemptions from restrictions and obligations shall have no effect on the examination of other applications (point 39 of the Regulation).

The Service observes that the requests usually do not clearly state the factual circumstances (when, with whom the agreement was concluded, on what basis the payment transfer is to be initiated/credited, the amount of the transfer, etc.), do not include the account number of the sender and the payee of the funds and the name of the bank, and do not include the documents substantiating the factual circumstances (contracts, copies of payment orders, details of the services rendered, documents of delivery, etc.).

A legal entity is in insolvency proceedings, its shareholder does not have an account in the Republic of Lithuania, and banks refuse to transfer funds to a bank registered in the Russian Federation. Can the insolvency administrator keep the funds of a sanctioned person in the Service's account?

Article 1(1) of the Law on Insolvency of Legal Persons of the Republic of Lithuania (hereinafter referred to as the "Insolvency Law") provides that the purpose of this Law is to create conditions for an efficient insolvency process of legal persons, ensuring a balance between the interests of the creditors and the interests of the legal persons. Article 2(4) of the same Law defines that the insolvency proceedings of a legal person are the totality of the procedures laid down in this Law aimed at the liquidation of a legal person, whether by judicial or extrajudicial proceedings, by satisfying the claims of creditors with the assets of the legal person.

The Service also notes that pursuant to Article 59 and Article 66 of the Law on Insolvency, the insolvency administrator exercises the rights and duties of the management body of a legal person and has the duty to independently decide on the protection of the rights and legitimate interests of the creditors of the legal person, as well as the rights and legitimate interests of the legal person, the management, use and disposal of the assets of the legal person, and the satisfaction of the interests of creditors.

Please note that the Service is a law enforcement agency, the purpose of which is to carry out the detection and investigation of crimes, other offences against the financial system and related crimes and other offences (Article 2 of the Law of the Republic of Lithuania on the Financial Crime Investigation Service). The Service is not responsible for the implementation of the bankruptcy process of a legal entity.

Can an advance payment against an invoice be authorised under Council Regulation No. 269/2014, No. 833/2014 or No. 765/2006?

No, Council Regulations No. 269/2014, No. 833/2014 and No. 765/2006 do not provide for the possibility to authorise an advance payment.

Please note that each application is considered on its own merits, taking into account all the legal and factual circumstances. A decision taken following the examination of one application for exemptions or waivers from restrictions and obligations has no effect on the examination of other applications.

In which regulation the restrictive measures against the Russian Federation in connection with its military aggression against Ukraine can be found?

The main restrictive measures against the Russian Federation are set out in Council Regulations:

1. Council Regulation (EU) No 269/2014 of 17 March 2014 concerning restrictive measures in view of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine (individual sanctions);

2. Council Regulation (EU) No 833/2014 of 31.07.2014 concerning restrictive measures in view of actions by Russia to destabilise the situation in Ukraine (sectoral sanctions).

Please note that the current versions of the Regulations must be followed.

You can check which restrictive measures are currently in place for a specific country on the interactive EU sanctions map.

In which regulation the restrictive measures against the Republic of Belarus related to the military aggression against Ukraine can be found?

The main restrictive measures against the Republic of Belarus are defined in the Restrictive Measures Directive of 18 May 2006. Council Regulation (EC) No 765/2006 of 18 May 2006 concerning restrictive measures in view of the situation in Belarus and in view of the involvement of Belarus in the Russian aggression against Ukraine.

Please note that the current versions of the Regulations must be followed.

You can check which restrictive measures are currently in place for a particular country on the interactive European Union sanctions map.

What is the Service’s responsibility in implementing international sanctions?

Pursuant to Article 11(1)(3) and 11(3)(1) of the Republic of Lithuania Law on International Sanctions (hereinafter - the Law), the competent authorities shall respond to inquiries of natural and legal persons regarding the implementation of international sanctions within the scope of their activities in the Republic of Lithuania.

The Service is the competent authority for the implementation of international sanctions in the Republic of Lithuania within the scope of its activities - restrictions on the disposal of funds and economic resources, restrictions on payments, and other restrictions on financial activities (financial sanctions).

Financial sanctions: restrictions on the rights of internationally sanctioned entities to hold, use and dispose of money, securities, chattels, other assets and property rights; restrictions on payments to internationally sanctioned entities; and other restrictions on financial activities.

Thus, in the light of the existing legal framework, the Service takes decisions relating to the implementation of financial penalties.

It should be noted that unless an exception is provided for in the legal act imposing international sanctions, the competent authorities in the Republic of Lithuania, including the Service, are not authorised to grant a waiver from the restrictions and obligations imposed by international sanctions. For example, the Service does not issue a permit for the transport of euro banknotes, the official currency of a Member State of the European Union, to the Republic of Belarus (18 May 2006, Article 1za of Council Regulation (EC) No 765/2006 of 18 May 2006 concerning restrictive measures in view of the situation in Belarus and in view of the involvement of Belarus in the Russian aggression against Ukraine).

For more information on other competent authorities in Lithuania, see https://www.urm.lt/sankcijos.

What are the requirements for requests to the Service for exemptions from restrictions and obligations imposed by international sanctions?

Paragraph 33 of the Description of Procedures for the Implementation of International Sanctions (hereinafter - the Description), approved by Resolution No 535 of the Government of the Republic of Lithuania of 25 May 2022, states that if the legislation establishing international sanctions provides for exceptions to their implementation and/or stipulates that permissions may be granted to waive the restrictions and obligations imposed by international sanctions, the decisions on the application of the exceptions or the granting of permissions not to apply the restrictions and obligations imposed by the international sanctions shall be taken by the competent authorities.

In accordance with the provisions of points 33, 34, 37 of the Regulations, if the legal acts establishing international sanctions provide for exceptions to their implementation and/or stipulate that exemptions from the restrictions and obligations imposed by international sanctions may be granted, the decisions on the application of exemptions or the granting of exemptions from the restrictions and obligations shall be taken by the competent authorities on the basis of reasoned requests from the entities subject to international sanctions and other interested persons, examined in accordance with the procedure established by the Law on Public Administration of the Republic of Lithuania.

Paragraph 34 of the Regulation states that such a request must be reasoned and must be accompanied by documents supporting the factual and legal circumstances set out in the request.

In accordance with point 39 of the Regulation, each such application shall be considered on its own merits, taking into account all the legal and factual circumstances, and a decision taken following the examination of one application for exemptions or for the granting of exemptions from restrictions and obligations shall not have any effect on the examination of other applications.

In accordance with the provisions of paragraph 41 of the Regulation, the decision on granting exemptions or waivers from the restrictions and obligations imposed by international sanctions shall take into account the criteria and conditions for a specific exemption or waiver as set out in the international sanctions legislation and shall assess whether the application and the documents supporting it comply with those criteria and conditions.

The Service may only take a decision on the granting of an exemption/authorisation if it is fully satisfied that the natural or legal person, entity or organisation sanctioned, or a natural or legal person, entity or organisation associated with them, will not have access, directly or indirectly, to the funds or economic resources, and if it is satisfied that this will not lead to a situation where the funds or economic resources will be used for the benefit of the natural or legal persons, entities or organisations.

The competent authority shall apply strict rules when deciding whether to grant exemptions or authorisations from restrictions and obligations. Exemptions and waivers shall be granted only in exceptional cases and after an assessment of the necessity and justification for the exemption. A person requesting exemptions or waivers from restrictions and obligations must provide the competent authority with specific legal and factual justification of the circumstances.

Thus, the Service points out that the request itself must state the grounds for the request and specify what it seeks to achieve (the subject-matter must not be alternative, but clearly formulated and justified), i.e. It is not only a general request but also a detailed description, specifying the details of the request, including details of the sender/recipient of the funds (name, legal entity code, management scheme, articles of association, final beneficiary information, etc.), the basis for the provision of the service (accompanied by the authorisation of the competent authority to provide the service, etc.).

Description can be found here - https://e-seimas.lrs.lt/portal/legalAct/lt/TAD/ae89cad1dd7911ecb1b39d276e924a5d/asr.

What are the responsibilities for violations of international sanctions?

Natural and legal persons shall be liable for violations of international sanctions in accordance with the procedure established by the Republic of Lithuania Law on International Sanctions (hereinafter - the Law) and other laws of the Republic of Lithuania.

Legal persons shall be liable for violations of international sanctions in accordance with the Law, provided that violations committed by legal persons do not give rise to criminal liability for legal persons under the applicable law.

The following sanctionsmay be imposed on a legal person by the authorities imposing sanctions for breaches of international sanctions:

a fine of between 50 and 100 per cent of the value of the goods, services or funds which were the subject of the breach of the international sanctions, but not less than 10 000 EUR;
a fine of between 10 000 EUR and 50 000 EUR where the subject-matter of the breach of international sanctions is not goods, services or funds;
where a legal person violates international sanctions repeatedly within one year of the imposition of a measure of sanctions for a violation of international sanctions, or where the value of the goods, services, or funds which were the subject of the violation of international sanctions exceeds 100 000 EUR, a fine of up to 5 per cent of the gross annual income, but not less than 100 per cent of the value of the goods, services, or funds which were the subject of the violation of international sanctions, and not less than 20 000 EUR.

Violations of international sanctions may be accompanied by the confiscation of goods or funds that were the object or result of the violation of international sanctions.

Please note that the Council Regulations prohibit knowingly and intentionally engaging in activities the object or effect of which is to circumvent restrictive measures (sanctions).

A natural person who violates international sanctions implemented in the Republic of Lithuania or restrictive measures established by the laws of the Republic of Lithuania may be subject to administrative liability under Article 515 of the Code of Administrative Offences of the Republic of Lithuania (hereinafter - the CAO). Violation of this Article is punishable by a fine from 200 EUR to 6 000 EUR for individuals and from 600 EUR to 6 000 EUR for the heads of legal entities or other responsible persons.

If the administrative offence provided for in Article 515(1) of the CAO is committed repeatedly, persons may be fined from 2 000 EUR to 6 000 EUR, and managers or other responsible persons of legal persons from 4 000 EUR to 6 000 EUR.

The confiscation of the instrument, tool, means, goods or funds which were the object or result of the offence may be imposed along with a fine.

Natural and legal persons may be prosecuted for violations of international sanctions or restrictive measures imposed by the laws of the Republic of Lithuania under Article 123(1) of the Criminal Code of the Republic of Lithuania, which can result in a fine or arrest or imprisonment of up to five years.

Who implements international sanctions in Lithuania?

International sanctions are established by directly applicable European Union legislation and are implemented in full (Article 6(1) of the Republic of Lithuania Law on International Sanctions).

The Service points out that all natural and legal persons implement international sanctions independently and are responsible for their proper application, and that the restrictive legislation of the European Union is directly applicable.

The case law states that each legal person, entity or institution must independently (independently of the opinion of the Service or other authorities) assess the possible links of a business partner, customer or other person with whom legal relations are established or initiated with an entity subject to European Union sanctions and decide on the possibility of legal relations with such a person (Ruling of the Supreme Court of Lithuania of 27 June 2024 in civil case No e3K-3-139-701/2024).

The implementation of the sanctions imposed by the European Union should also take into account the guidelines, best practices and other interpretations issued by the European Union. Entities implementing international standards and recommendations may also choose to implement sanctions imposed by third countries that are not binding in the Republic of Lithuania (for example, the United States of America, the United Kingdom, Canada, etc.).

In this regard, we note that all natural and legal persons engaged in economic activities, financial institutions and other entities or organisations established or operating in the State are obliged to comply with the information published on the website of the Service on the links of natural and/or legal persons with entities subject to international sanctions.

Please note that all information on the implementation of international sanctions is publicly available on the website of the European Union law and other public documents of the European Union and on the website of the Service. Useful link: https://www.sanctionsmap.eu/#/main (search for sanctioned natural and legal persons).

Please also note that it must be ensured that the sanctioned persons do not directly or indirectly control a legal person or another organisation without legal personality.

I have restricted the use of personal funds. How long do I have to inform the Service?

Natural and legal persons who, in accordance with the requirements of the legislation on international sanctions, have restricted the disposal of funds or economic resources of entities, must inform the Service within2 working days.

Legal persons and other organisations without legal personality shall inform the Service of the fact that they are owned or controlled by financially sanctioned entities, as well as of the fact that a legal person or other organisation without legal personality is owned or controlled by financially sanctioned entities, within 2 working days from the date of becoming aware of such information.

Information is available at [email protected].

Can I enter into a contract with an entity subject to international sanctions?

Article 7(1) of the Republic of Lithuania Law on International Sanctions (hereinafter - the Law) stipulates that it is prohibited to enter into transactions and to assume new obligations, the performance of which is contrary to the international sanctions implemented in the Republic of Lithuania - such transactions shall be null and void.

It is prohibited to carry out transactions and obligations during the period of implementation of international sanctions, the performance of which contradicts the international sanctions implemented in the Republic of Lithuania (Article 7(2) of the Law).

Transactions entered into and obligations incurred before the implementation of international sanctions in the Republic of Lithuania must be terminated immediately, unilaterally or by agreement of the parties, or suspended during the period of implementation of international sanctions (Article 7(3) of the Law).

Thus, under the current legal framework, international sanctions are binding on all natural and legal persons, including financial market participants, and prior authorisation from the competent authority is required to enter into a transaction with a sanctioned entity.

Does the Service provide advice on the possibility of civil transactions?

The Service is a law enforcement authority, but its functions do not include the interpretation/assessment of civil contracts or the assessment of civil liability issues. It does not evaluate agreements concluded by natural or legal persons, their content, nor does it take decisions on the enforceability or termination of transactions.

Is the permission of the Service required when a court has issued a decision ordering a person to pay a debt to a sanctioned person?

Article 109 of the Constitution of the Republic of Lithuania provides that justice in the Republic of Lithuania shall be administered only by the courts. The judge and the courts shall be independent in the administration of justice, and judges shall only obey the law when hearing cases.

Article 9(1) of the Republic of Lithuania Law on Courts stipulates that final judgments of the courts of the Republic of Lithuania shall be binding on all public authorities, officials and employees, enterprises, institutions, organisations, other legal and natural persons and shall be enforceable throughout the territory of the Republic of Lithuania.

Therefore, in the light of the foregoing, it can be concluded that all natural and legal persons implement international sanctions independently, the Service decides on the granting of exemptions or waivers from the restrictions and obligations laid down in the legislation establishing international sanctions and carries out all the procedures necessary for that purpose. The Service shall not pronounce on the content or the enforcement of judicial decisions. In the case of a court decision, the authorisation of the Service is not required.

I have noticed that the customer may be circumventing international sanctions. Do I need to report this?

Yes. Please note that the Council Regulations prohibit knowingly and intentionally engaging in activities the object or effect of which is to circumvent restrictive measures (sanctions).

Article 13(1) of the Republic of Lithuania Law on International Sanctions stipulates that natural and legal persons shall be held liable for violations of international sanctions in accordance with the procedure established by this Law and other laws of the Republic of Lithuania.

Point 10 of the Description of the Procedure for the Implementation of International Sanctions, approved by Resolution No 535 of the Government of the Republic of Lithuania of 25 May 2022, provides that natural and legal persons who, in accordance with the requirements of legal acts establishing international sanctions, have restricted the disposal of funds or economic resources of entities or have received information on funds and economic resources that should have been frozen by natural and legal persons obliged to do so, shall inform the Service within 2 working days.

Financial institutions and other obliged entities are also obliged to report suspicious monetary operations or transactions, including possible breaches of sanctions, under the Republic of Lithuania Law on Prevention of Money Laundering and Terrorist Financing (Article 16).

In the event of irregularities relating to breaches of international sanctions, the company must submit a notification to the Service by email to [email protected] after performing an internal investigation.

What is the form of notification of a breach of sanctions?

Notification of circumvention of sanctions shall be submitted to the Service in free form by e-mail to [email protected]. Notifications of circumvention of sanctions shall be made as soon as possible after completion of internal investigation.

Where can I find the European Commission’s clarifications on international sanctions?

The European Commission’s interpretations on the implementation of the Council Regulations can be found at: https://finance.ec.europa.eu/publications/consolidated-version_en. Please note that the European Commission’s interpretations are updated regularly.

If a person is not on an international sanctions list, is he or she deemed not to be sanctioned?

It should be pointed out that sanctioning may be applied in two ways: (1) by inclusion in the list provided for in the Annex to the Regulation, or (2) by establishing that the undertakings are owned, managed or controlled by persons included in the said list.

The case-law holds that the mere fact that a person is not formally listed on the sanctions lists does not mean that he or she will not be subject to the sanctions regime, but that a listed person may de facto stand behind him or her. A contrary interpretation of the law would mean that the sanctions would become ineffective, as the establishment of a “letterbox company”, which is formally unrelated to the real owner and/or beneficiary, would be sufficient to circumvent them (paragraph 33 of Ruling of the Supreme Court of Lithuania in Civil Case No 3K-3-255-611/2022).

Thus, in each case, it is necessary to make sure that the person is not managed/controlled by an authorised person. For more information, see the European Commission’s interpretations (https://finance.ec.europa.eu/publications/consolidated-version_en).

Prevention of money laundering and terrorist financing 17

Do financial institutions and other obliged entities have to provide information to foreign entities?

Pursuant to 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 purpose of money laundering or terrorist financing and amending Regulation (EU) No. 648/2012 and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC, Article 53(2), where the Financial Intelligence Unit (hereinafter - the FIU or, in this case, the Service) wishes to obtain additional information from an obliged entity established in another Member State and operating in its territory, the request shall be addressed to the FIU of the Member State where the obliged entity is established. That FIU shall receive the information in accordance with Article 33(1) and transmit it without delay.

Thus, the obliged entity provides information only to the Financial Intelligence Unit of the territory of establishment.

Do I have the right to refuse to provide services to an entity?

Financial institutions and obliged entities have the discretion to decide which customers they want to serve and which customers they want to refuse.

We note that financial institutions and obliged entities are required to establish appropriate internal policies and internal control procedures relating to, inter alia, the commencement/termination of business relationships, the identification and verification of customers and beneficiaries (entities for whose benefit a monetary transaction has been carried out), risk assessment, risk management, the organisation of monitoring of business relationships and/or transactions, the establishment of criteria for the identification of suspiciousness of transactions or operations, the submission of notifications and information to the Service, etc. The internal control procedures shall be developed taking into account the results of the European Commission’s risk assessment, the results of the national risk assessment on money laundering and terrorist financing, the instructions of the Director of the Service, the European Supervisory Authorities’ documents and guidelines on the risk factors to be taken into account and the measures to be taken in cases where the use of simplified means of identification of customers is allowed, and other documents.

Obliged entities are required to assess existing and potential risks related to money laundering and terrorist financing, taking into account European Union and national legislation and sub-legislation on the prevention of money laundering and terrorist financing, and to put in place systems or establish suspiciousness criteria to address those risks.

How do I report a suspicious customer transaction?

Pursuant to Article 16(1) of the Republic of Lithuania Law on Prevention of Money Laundering and Terrorist Financing (hereinafter - the Law), financial institutions and other obliged entities are obliged to notify the Service immediately, and not later than within one working day of the occurrence of any such knowledge or suspicion, if they know or suspect that any assets of any value have been obtained directly or indirectly from a criminal offence or from involvement in such an offence, as well as if they know or suspect that these assets are related to terrorist financing.

Article 29(1)(5) of the Act stipulates that financial institutions and other obliged entities must establish appropriate internal policies and internal control procedures regarding: the submission of reports and information to the Service.

The internal control procedures shall be developed taking into account the results of the European Commission’s risk assessment, the results of the national risk assessment on money laundering and terrorist financing, the instructions of the Director of the Service, the documents and guidelines of the European Supervisory Authorities on the risk factors to be taken into account and the measures to be taken in cases where simplified customer identification is allowed, and other documents.

In the light of the above, the notifications to the Authority referred to in Article 16(1) of the Law shall be subject to an internal investigation, the procedures for which must be laid down in internal policies and internal control procedures.

The legislation on suspicious transaction reporting is available here:

https://www.e-tar.lt/portal/lt/legalAct/b3d68f808c0d11ed8df094f359a60216.

What if the customer refuses to provide the requested information?

Article 18 of the Law on Prevention of Money Laundering and Terrorist Financing of the Republic of Lithuania provides that if a customer evades or refuses to provide additional information to a financial institution or other obliged entity upon request and within the time limits set by the customer, financial institutions and other obliged entities may, in accordance with their internal policy and internal control procedures, refuse to execute a monetary operation or a transaction, or may discontinue a transaction or a business relationship with a customer.

Is there an obligation to collect and store information on the final beneficiary of customers, or is it sufficient to check this information on the website of the Centre of Registers?

Pursuant to Article 12(4) of the Republic of Lithuania Law on Prevention of Money Laundering and Terrorist Financing (hereinafter - the Law), financial institutions and other obliged entities shall verify the documents provided by the customer and the information on the beneficiary on the basis of documents, data or information obtained from a reliable and independent source.

Such action by a financial institution or other obliged entity includes asking the customer to identify public sources where information about the beneficiary could be confirmed. The customer shall certify the correctness of the information provided by signing and stamping it (if it is required to have a stamp under the legislation governing its activities) (Article 12(5) of the Law).

In the opinion of the Service, financial institutions and other obliged entities are obliged to collect and store beneficiaries’ data for the period of time set out in the Law.

Does the Service provide interpretations of the Republic of Lithuanian Law on the Prevention of Money Laundering and/or Terrorist Financing?

In accordance with the legal acts regulating the activities of the Service, the Service is not authorized to officially interpret legal acts, therefore the Service, in response to requests from natural or legal persons, can only provide the opinion of the Service, which cannot be understood as an official interpretation of legal acts.

What legal acts regulate the procedure for submitting reports to the Service on suspicious monetary transactions or suspicious transactions and information on monetary transactions or transactions exceeding the amount of 15 thousand euros in cash?

Systematized legal acts are available on the website of the Service.

Does the Service carries out an assessment of the compliance of individuals/legal entities with the requirements of the Republic of Lithuania Law on Prevention of Money Laundering and/or Terrorist Financing, and provides a certificate for this law?

Pursuant to Article 4, Part 9 of the Republic of Lithuania Law on the Prevention of Money Laundering and Terrorist Financing (hereinafter referred to as the Law), the Service approves instructions to other entities not specified in Parts 1-8 of this article aimed at preventing money laundering and/or terrorist financing, supervises activities of financial institutions and other obliged entities related to the prevention of money laundering and/or terrorist financing, provides them with methodological assistance.

We note that obliged entities must establish appropriate internal policies and internal control procedures related to, among other things, the beginning/end of business relationships, identification and verification of clients and beneficiaries (Article 2, Part 14 of the Law), risk assessment, risk management, organizing the monitoring of business relations and/or operations, establishing criteria for the suspiciousness of operations or transactions, submitting reports and information to the Service, etc.

Please note that the Service does not issue payment institution licenses, nor does it assess the business plans and operating models of natural/legal entities, and does not provide advice on the latter's compliance with the provisions of the Law or other legal acts. Obliged entities can independently choose an activity model, and the risk of the activity model must be determined after systematically assessing the risks of the client, products, services and/or operations, country and/or geographical region, other factors, and taking into account the provisions of the Law and other legal acts.

Thus, in each case, financial institutions and obliged entities individually, after evaluating all known and important circumstances, following the established internal policy and internal control procedures and taking into account the legal norms in force at the time, make decisions regarding the compliance of the activities carried out with the requirements for the prevention of money laundering and terrorist financing.

Is the list of criteria for identifying potential money laundering and suspicious monetary transactions or transactions exhaustive?

We note that the Director of the Service on 5 December 2014 by Order No. V-240 approved the list of criteria for identification of possible money laundering and suspicious monetary operations or transactions is not exhaustive.

Financial institutions and other obliged entities, having established appropriate internal policies and internal control procedures related to the submission of reports and information to the Serviice, must also establish other possible criteria for identifying money laundering and suspicious monetary transactions or transactions, which are not specified in the Order, but which are taken into account may submit reports to the Service.

Does the Office provide information about legal entities registered in the Republic of Lithuania and their activities?

No, information about legal entities registered in the Republic of Lithuania can be found in the Register of Legal Entities.

What is business relationship? When does it start?

Article 2, part 1, point 3 of the Republic of Lithuania Law on the Prevention of Money Laundering and Terrorist Financing states that business relations are business, professional or commercial relations between a client and financial institutions or other obligated entities, related to their professional activities, which were intended to continue at the time of establishing relations for a certain period of time.

The beginning of a business relationship must be assessed individually in each case. Usually, this is considered the beginning of cooperation between the client and the financial institution, other obliged entities, i.e. signing a contract or other type of agreement, opening a payment account, initiating a payment order, currency exchange, etc. Business relationships are characterized by continuity.

Does a legal entity that is not registered in the Republic of Lithuania, but provides services to subjects of the Republic of Lithuania, have an obligation under the Republic of Lithuania Law on the Prevention of Money Laundering and Terrorist Financing to notify the Service of suspicious customer transactions?

According to the current regulation, the obliged entities send reports on suspicious monetary operations or transactions to the financial intelligence unit of the member state in whose territory they are established.

The Service is the main state institution that coordinates the implementation of money laundering prevention measures. However, the Service is not responsible for the implementation of money laundering and/or terrorist financing prevention measures outside the Republic of Lithuania, as well as for the supervision of entities registered outside the Republic of Lithuania, which must implement money laundering and terrorist financing prevention measures.

What is a suspension according to the Law on Prevention of Money Laundering and Terrorist Financing of the Republic of Lithuania and when does the suspension start?

Part 2 of Article 16 of the Republic of Lithuania Law on the Prevention of Money Laundering and Terrorist Financing (hereinafter referred to as the Law) answers the question of what suspension is - financial institutions and other obliged entities, having determined that their client is conducting a suspicious monetary transaction or transaction, regardless of the monetary transaction or transaction amount, must suspend that transaction or transaction (except in cases where it is objectively impossible to do so due to the nature of the monetary transaction or transaction, the method of their execution or other circumstances) and no later than within 3 working hours from the suspension of the monetary transaction or transaction regarding this transaction or transaction to report to the Office, and lawyers or attorney assistants - to the Lithuanian Bar Association (if the monetary transaction or transaction was not stopped due to the nature of the monetary transaction or transaction, the manner of their execution or other circumstances, within 3 working hours from the detection of the suspicious monetary transaction or transaction).

The suspension period is 10 working days, starting from the day after the notification.

What email can be used to submit an inquiry regarding the implementation of money laundering prevention?

Inquiries related to the prevention of money laundering can be submitted to the general e-mail of the Service [email protected] or e-mail [email protected].

What legal acts must be followed by financial institutions and other obliged entities when implementing the prevention of money laundering and/or terrorist financing?

Financial institutions and other obliged entities, when implementing money laundering and/or terrorist financing prevention measures, must follow the Republic of Lithuania Law on the Prevention of Money Laundering and Terrorist Financing, list of criteria approved for identification of possible money laundering and suspicious monetary operations or transactions by Order No. V-240 of the Director of the Service, by Order No. V-273 "On the approval of supervision instructions of the Financial Crimes Investigation Service under the Ministry of Internal Affairs of the Republic of Lithuania in the field of regulation of the appropriate implementation of international financial sanctions", approved on 20 October 2016 of the Director of the Service, Order No. V-314 dated 30 November 2016 "On the approval of the Technical requirements for the client identification process, when identification is determined remotely using electronic means that allow live video transmission", of the Director of the Service. Order No. V-131 of 12 September 2017 "On the approval of the description of the procedure for the approval and submission of a copy of the personal identity document", Order no. 1V-701 of 16 October 2017 of the Minister of Internal Affairs of the Republic of Lithuania.

October 16 by "Regarding the approval of the description of the procedure for suspending suspicious monetary transactions or transactions and submitting information about suspicious monetary transactions or transactions to the Financial Crime Investigation Service under the Ministry of Internal Affairs of the Republic of Lithuania", Oder no. V-5 dated 10 January 2020 of the Director of the Service "On the approval of instructions for operators of deposit virtual currency wallets and operators of virtual currency exchanges aimed at preventing money laundering and/or terrorist financing" and other legal acts regulating the prevention of money laundering and terrorist financing, instructions of the Bank of Lithuania, other instructions of supervisory authorities, as well as approved internal policy and internal control procedures for identifying, assessing and properly managing risks related to money laundering and terrorist financing. The legal acts are available on the website of the Service.

Are financial institutions and other obliged entities required to have internal policies and/or control procedures in place for the prevention of money laundering?

Pursuant to Article 29(1) of the Law on Prevention of Money Laundering and Terrorist Financing of the Republic of Lithuania, it is stipulated that financial institutions and other obliged entities must establish appropriate internal policies and internal control procedures related to:

identifying and verifying the identity of customers and beneficiaries;
risk assessment, risk management, taking into account the risks set out in paragraph 2 of this Article;
organising the monitoring of business relationships and/or operations;
implementation of international financial sanctions and restrictive measures;
submitting reports and information to the Financial Crimes Investigation Service;
maintenance of logbooks;
the storage of the information referred to in this Law;
updating customer and beneficiary identification information;
providing training to staff to ensure that they are properly familiarised with anti-money laundering and/or anti-terrorist financing requirements;
the allocation of functions within the financial institution for the implementation of anti-money laundering and/or anti-terrorist financing measures, as well as the management and communication of information on compliance.

Financial institutions and other obliged entities are required to assess the existing and potential risks related to money laundering and terrorist financing, taking into account European Union and national legislation and sub-legislation on the prevention of money laundering and terrorist financing, and to put in place systems or establish suspiciousness criteria to address those risks.

In accordance with Article 29(3)(3) of the Law, the internal control procedures referred to in paragraph 1 of this Article shall be drawn up taking into account the documents issued by the European Supervisory Authorities in the field of prevention of money laundering and/or terrorist financing.

Thus, obliged entities are left with the discretion to determine the requirements for the identification of customers and beneficiaries in the light of the above-mentioned documents. Also, the Law on Prevention of Money Laundering and Terrorist Financing of the Republic of Lithuania requires obliged entities to implement the documents issued by the European Supervisory Authorities.

External information system of the Service (data submission portal) - what notifications are provided and how to log in, what documents must be submitted?

Reports on suspicious monetary transactions or transactions and information on monetary transactions or transactions exceeding the amount of EUR 15 thousand in cash, if the value of such monetary transaction or transaction is equal to or exceeds EUR 15,000 or virtual currency exchange transactions or virtual currency transactions, if such monetary transactions whether the value of the transaction is equal to or exceeds 15,000 euros, financial institutions and other obliged entities must provide, implementing the provisions of Articles 16 and 20 of the Republic of Lithuania Law on Prevention of Money Laundering and Terrorist Financing.

The provision of data takes place through the Service's external information system (data provision portal) - Provision of data on monetary transactions and transactions/suspicious monetary transactions and transactions. You can connect to the System (portal) through the website of the Service, after activating the link or through the electronic portal of the government, by ordering the service Provision of data on monetary transactions and transactions-/suspicious monetary transactions and transactions.

In order to obtain permission to connect to the Service's information system, it is necessary to send a notification to the Service by e-mail ([email protected]) about the appointed person who will cooperate with the Service, and to provide the appointed person's data (name, surname, social security code, telephone number, e-mail ) and information about the represented company (name, company code, company activity).

A citizen of the Republic of Lithuania or a foreign citizen with an e- resident card or residence permit in Lithuania, only after access is granted and confirmation is received (access is notified by e-mail through which the information/request was sent).

Each designated responsible person providing data through the external information system of the Service can only see the information provided by him. Only a person with administrator rights can see the information of all representatives who previously provided data through the system. In order to grant these rights, it is necessary to apply to the Service with a request to grant such rights.

In the event of a change in the responsible person cooperating with the Service, a new notification must be submitted, naming the changed person and requesting the cancellation of access to the person who no longer works. Usually, such information is provided by company managers, but you can personally inform about a change of workplace by e-mail ([email protected]), submitting a request to cancel access to the former company's account.

On 2017 October 16 The Minister of Internal Affairs of the Republic of Lithuania by order No. 1V-701 approved the description of the procedure for suspending suspicious monetary transactions or transactions and submitting information about suspicious monetary transactions or transactions to the Financial Crimes Investigation Service under the Ministry of Internal Affairs of the Republic of Lithuania.

If you have any questions about the procedure for providing information, please contact the Money Laundering Prevention Board of the Service in Vilnius by phone 271 7457 or 271 6686.

Update date: 2024-10-24