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Prevention of money laundering

How do we implement the “Know Your Customer” principle?

  • A reliable and smoothly operating financial system is important for everyone.
  • We contribute to this by implementing the “Know Your Customer” principle.
  • Like other banks, we are obliged to do so by law.
  • We must collect certain information about our customers.
  • Knowing their payment habits and sources of income can help us respond to unusual activity and prevent financial crime.
Fill the Questionnaire

Please fill out the Customer Questionnaire for Legal Entities so that we can get to know you better and comply with the requirements of the legislation. This helps us to:

  • understand the purpose and nature of your relationship with the bank;
  • have up-to-date and accurate information about you;
  • seamlessly provide services and relevant information and stay in touch with you.

We regularly review customer data and notify you in advance when it is time to update the data in the Customer Questionnaire for Legal Entities. Therefore, it is important to provide your contact details and read messages in the Internet Bank.

The Questionnaire is a document in which the customer must provide information requested by the bank. The Questionnaire was compiled in accordance with the Republic of Lithuania Law on the Prevention of Money Laundering and Terrorist Financing and other regulations. In implementing the Know Your Customer statutory requirements, we request you to periodically update the Questionnaire data. The frequency of updates depends on a variety of circumstances, such as the potential risk of money laundering and terrorist financing. The bank will notify you about the upcoming date by which the data in the Questionnaire must be updated. Legislation that establishes strict Know Your Customer requirements also provides for measures that we can apply if the customer avoids or refuses to update the data in the Questionnaire at the request of the bank and within the set deadlines. The applied restrictions will be lifted after the customer submits the information requested by the bank, i.e. after updating the data in the Questionnaire.

You can fill in and submit the Questionnaire in one of the most convenient ways for you:

  • by logging in to your internet banking page;
  • by booking a consultation online and arriving to the preferred Swedbank branch at the time convenient for you. Bring a valid personal identity document (e.g. passport, ID card) with you.

Strict security and confidentiality regulations are applied to all data that you supply to us.

We disclose customer data to third parties only with the written consent of the customer, or when the disclosure is required by the competent authorities (law enforcement, tax administration, court, etc.), which have the right, under the provisions of current legislation, to receive information from the bank.

The concept of politically exposed person is specified in legislation, which states that politically exposed person is a natural person, who presently occupy or in the recent 12 months have held an important public position in any state and/or international or foreign state institutions, and his close family members (the spouse, the person with whom partnership has been registered (hereinafter – the cohabitant), parents, brothers, sisters, children, children’s spouses and children’s cohabitants) or his close associates (a natural person who participates in the same legal entity or an organisation not having legal personality, or maintains any other business relationship with the person who presently occupy or have held an important public position; a natural person who has sole beneficial ownership of the legal entity or an organisation not having legal personality which has been set up or is operating for the de facto financial or any other private benefit of the person who presently occupy or have held an important public position). When deciding whether a relative is a politically exposed person, the above-mentioned concept of a close family member must be followed, as only these close family members are considered to be politically exposed persons. We collect information on politically exposed persons because it is required by the Republic of Lithuania Law on the Prevention of Money Laundering and Terrorist Financing.

Important public position shall be considered the following:

  • Head of the State, Head of the Government, a minister, a vice minister or a deputy minister, State Secretary, the Chancellor of the Parliament, Government or Ministry
  • Member of the Parliament
  • Member on the Supreme Court, the Constitutional Court or any other judicial authority, whose decisions are not subject to further appeal
  • Mayor of the municipality, director of the municipal administration
  • Member of the management body of the national supreme audit and control institution, the chairperson, deputy chairperson or a member of the board of the central bank
  • Ambassador, chargés d’affaire, Chief of Defence of the Republic of Lithuania, commanders of the armed forces and units, Chief of the Defence Staff or high-ranking officer in the armed forces of foreign country
  • Member of the management or supervisory body of a state enterprise, public company, private company all or part of shares of which awarding more than ½ of all votes in the general meeting of shareholders of these companies are held by the State by right of ownership
  • Member of the management or supervisory body of a municipal enterprise, public company, private company all or part of shares of which awarding more than ½ of all votes in the general meeting of shareholders of these companies are held by the municipality by right of ownership and which are considered to be large enterprises within the meaning of the Law of the Republic of Lithuania on Financial Reporting by Undertakings
  • Head, deputy head, member of the administrative, management or supervisory body of international intergovernmental organization
  • Leader, deputy leader, member of the administrative, management body of the political party

Please note that if you are an immediate family member or close associate of a politically exposed person, you must also submit the required information about this politically exposed person.

Important! If you do not complete the Customer Questionnaire for Legal Entities and submit it to us on time, we will not be able to provide you with some of our services, or maybe not any of them. This means that there may be limitations on the use of your bank account, your payment card(s), the Swedbank internet banking page and smart app; and other services may also be withheld from you. You will be able to resume using our services when you complete the Customer Questionnaire for Legal Entities and submit it to us. You will find more information in the General conditions of dealing with and servicing the customers.

International and Republic of Lithuania legislation provide a requirement for banks to implement the “Know Your Customer” principle in relation to new and current customers, specifying that banks have a duty to:

  • know what activities the customer is engaged in (what is the nature of his business), analyse his activities;
  • know who the beneficiaries of the customer are, i.e. natural persons in whose interests or for whose benefit the transactions or activities are carried out (the beneficiary of a legal identity is determined on the number of natural person(s), regardless of the number of controlling legal entities);
  • to carry out regular monitoring of the customer’s business relations, including examination of transactions concluded during such relations, to ensure that the executed transactions correspond to the bank’s knowledge of the customer and his business (type and nature of business, nature of transactions, business partners, field of operations, etc.) and the nature of the risk. Payment transactions are also considered to be transactions;
  • to understand the source (origin) of the customer’s funds.

The above-mentioned obligation to conduct a transaction ivestigation the bank can perform only after receiving from the customer explanations ragarding the operations performed on the customer's account and documents substantiating such operations, confirming the explanations provided by the customer.

The bank must also ensure that the money laundering and terrorist financing risk assessment is based on up-to-date and accurate information, and it must therefore regularly review and update the documents, data and information provided during the identification of the customer and the beneficiary. This provision applies not only to new but also to existing bank customers. The customer must notify the bank about any changes in this data.

When a customer is establishing business relations with a bank, the customer must fill out Customer Questionnaire for Legal Entities. These documents also need to be completed when updating information about the customer.

The bank shall ensure that the information provided by the customer and the data related to their business relations are protected in the same way as any other information constituting a bank secret. The main document regulating bank secrecy is the Republic of Lithuania Law on Banks of the (Article 55). The relationship between the bank and the customer due to the bank’s secrecy requirements is also regulated by the General conditions of dealing with and servicing the customersas well as the Principles of personal data processing.

The principle Republic of Lithuania laws that set the requirements in the field of prevention of money laundering and terrorist financing are:

  • Republic of Lithuania Law on the Prevention of Money Laundering and Terrorist Financing (and other legislation subsequently adopted on this foundation);
  • Decision No. 03-17 of 12-02-2015 of the Board of the Bank of Lithuania to approve instructions to Finance market participants, seeking to block the path to money laundering and/or terrorist financing (new version No. 03-15 of 30-01-2020).

You can get more information about the legislation that regulates money laundering on the website of the Financial Crimes Investigation Service under the Republic of Lithuania Ministry of Internal Affairs http://www.fntt.lt.

All current Republic of Lithuania laws are publicly available at the website www.lrs.lt

Yes, national and international legislation also obliges other banks operating in the country and other financial institutions to implement the Know Your Customer principle.

Money laundering is an act aimed at hiding or concealing the true source of illegally obtained funds or other assets, or preparing or attempting to do so and complicity in doing so.

Terrorist financing is providing financial assistance in any form for the purpose of terrorist activity or to individuals who plan and foment terrorist activity, or who lead it.

We are taking all necessary measures to prevent these illegal acts.

Banks must collect certain information about customers due to statutory requirements obliging the banks to implement the Know Your Customer principle and to mitigate various risks related to illegal activities. The bank has to collect specific information about customers in order to be aware of their payment habits and sources of income and to be able to respond to unusual activities related to the payment transactions carried out by the customer. The bank must regularly check and update this information. Therefore, customers are regularly asked to provide and/or update the Know Your Customer information and documents supporting their payment transactions. When you receive a request to update the data in the Questionnaire or to provide additional information (documents, clarifications), try to provide this information without delay. If, for objective reasons, you are unable to update the data in the Questionnaire or provide the requested information or documents at the specified time, we should be notified immediately. Information about the customers, the products and services they use (identity data, accounts, deposits, etc.) and their transactions obtained by the bank when providing financial services under the respective agreement is considered a bank secret and is protected in accordance with the legislation of the Republic of Lithuania. The main document regulating bank secrecy is the Republic of Lithuania Law on Banks (Article 55). The relationship between the bank and the customer in relation to bank secrecy is also regulated by the General conditions of dealing with and servicing the customers and Principles of personal data processing. The bank may disclose information constituting a bank secret only to the customers themselves or their legal representatives, as well as to the authorities and other persons, as provided for in the Republic of Lithuania Law on Banks and in the above-mentioned conditions and principles. A request for data does not mean that you are suspected of anything. Banks do not collect customer data on their own initiative, but because they are required to do so by laws and regulations. This is a common practice and these requirements apply to all customers. This could be compared to airport security checks, where all passengers are screened pre-flight or general security reasons.

In compliance with the requirements of legislation, we need to know and understand the origin (source) of the customer’s funds and/or assets. Therefore, in certain cases we may ask to submit documents confirming the legal origin (source) of the funds and/or assets.

Examples of documents that can normally explain the origin (source) of funds and/or assets:

  • if the origin of funds is income from the sale of shares or dividends of a legal entity, it can be confirmed by share sale contracts, a securities account statement or a document justifying the payment of dividends;
  • if the origin (source) of funds and/or assets is a loan, its actual granting can be confirmed by a payment order or other document confirming the fact of money transfer and a loan agreement in the form and content prescribed by law;
  • if the origin (source) of the funds and/or assets is the sale of real estate, the origin (source) of the funds and/or assets can be confirmed by a payment order or other document confirming the fact of money transfer and a purchase and sale agreement in the form and content prescribed by law.

Please note that the list of documents presented here is not exhaustive, i.e. each situation is assessed individually and you may be asked for another document confirming the origin (source) of funds and/or assets not included in this list.

Business customers receive special attention, as the company’s cash can be used to avoid paying taxes or to participate in VAT avoidance schemes.

Cash can also be used to pay undeclared wages, which can have a negative impact on the country’s economic growth and reduce employees’ social guarantees.

Such actions may give rise to money laundering or terrorist financing.

Swedbank aims to contribute to economic growth and to promote socially just and responsible business.

If we are not provided with the required information or requested documents (or, even if they have been provided, the questions have not been answered), in some cases we will no longer be able to provide you with certain services, e.g. we may refuse or suspend the execution of monetary operations or transactions, or impose restrictions on the use of the account, card(s), and/or the Internet Bank.

Please note that the money in your account will not disappear, but you will be able to use the bank’s services only after you provide the required information or documents. In addition, if we do not receive the required information or requested documents from you, we may decide to terminate the business relationship with you.

The section indicating the details of the payment is required not only to provide the payment information to the beneficiary, but also to explain to the bank (as a service provider) the real purpose of this monetary transaction. We expect proper business communication from our customers and are grateful for it; therefore, when specifying the details of the payment, we advise you to avoid ambiguities and to indicate the precise purpose of the payment. If inaccurate or ambiguous details of the payment are indicated, we may ask you to provide additional information and/or documents substantiating the monetary transaction.

Swedbank maintains strict ethical and moral standards in its work and it collaborates with customers whose funds and assets are legitimate, with no doubts about its legality. What we expect from our customers is:

A customer’s activities must be shown and explained in the appropriate Customer Questionnaire for Natural Persons or Legal Entities, as required. It is also important that all customer’s transactions done using our infrastructure match the customer’s activities and/or their usual behaviour and the information that the customer has supplied to the bank.

A transparent source of funds means that the customer has documents showing the legality of the funds acquired by him or a legal entity that he controls, and if required these documents can be produced for the bank.

The concept of ‘source of funds’ means the specific origin of the funds that were used or may be used for a specific payment or transaction.

In our business dealings with a customer, we take into account negative publications or other public information about natural persons and legal entities. This includes any adverse information provided in various news sources.

We also encourage our customers to choose their business partners carefully, as through these partners our customers may be unknowingly implicated in money laundering schemes or in maintaining business relations with sanctioned entities. As a result, customers can risk their own reputation.

We expect our customers not to enter into transactions with legal entities or natural persons unrelated to that particular transaction. As companies registered in offshore jurisdictions (e.g. Belize, Panama, etc.) or limited liability (LP/LLP) companies (e.g. registered in the UK, Scotland, Canada) are at high risk of being involved in money laundering schemes, we do not accept transactions with such entities.

Beneficial owner means a natural person who owns or controls the customer and/or a natural person on whose behalf a transaction or activity is being conducted.

Hereinafter, the term “legal entity” includes legal entities and collective investment undertakings.

  1. The following persons are considered the beneficial owners of the customer (legal entity):

    1.1. a natural person who owns or directly or indirectly controls the customer, by holding a sufficient percentage of the ownership and/or voting rights in the customer or by controlling the customer via other means.

    Direct owner of the customer: a natural person who directly controls the customer, i.e. holds more than 25 per cent of the ownership and/or voting rights in the customer.
    Please see an example in Diagram No 1.

    Indirect owner of the customer:

    • a natural person who controls the customer indirectly through other legal entities within the ownership and control structure of the customer, i.e. a natural person who directly controls (by holding more than 25 per cent of the ownership and/or voting rights) any legal entity within the ownership and control structure of the customer that controls the customer (by holding more than 25 per cent of the ownership and/or voting rights) directly or through other legal entities within the ownership and control structure of the customer;
      Please see an example in Diagram No 2.
    • a natural person who controls the customer indirectly through other legal entities within the customer’s ownership and control structure, i.e. a natural person who, directly or through other legal entities within the customer’s ownership and control structure, controls (by holding more than 25 per cent of the ownership and/or voting rights) several legal entities within the customer’s ownership and control structure, each of which individually holds no more than 25 per cent of the ownership and/or voting rights in the customer, but collectively hold more than 25 per cent of the ownership and/or voting rights in the customer;
      Please see an example in Diagram No 3.
    • a natural person who himself/herself and the legal entity(s) directly or indirectly controlled by him/her each individually hold(s) no more than 25 per cent of the ownership and/or voting rights in the customer, but collectively (by aggregating the ownership and/or voting rights in the customer held both directly and indirectly) the natural person holds more than 25 per cent of the ownership and/or voting rights in the customer.
      Please see an example in Diagram No 4.

    A natural person who otherwise controls the customer, where that natural person is not a direct or indirect owner of the customer. For example, in practice, there may be cases where a natural person exercises control over the customer in other ways (the list is not exhaustive):

    • the right to make strategic decisions and/or control the customer;
    • the right to appoint and/or remove the customer’s director and/or members of the board (or other collegiate management body);
    • the right to approve the annual financial statement relating to the payment of dividends;
    • the right to veto the decisions of the customer’s management bodies;
    • other ways of controlling the customer through close family or other personal or business relationships;
    • possibility to access or otherwise benefit from the customer’s assets and/or activities.

    1.2. a natural person holding the position of a senior manager** of the customer, provided that:

    • the person referred to in Clause 1.1 is not determined;
    • or there are doubts that the determined person is a beneficial owner of the customer.

    ** A senior manager is an official or employee holding a sufficiently high position who has sufficient knowledge of the money laundering and/or terrorist financing risk to the customer and is responsible for making decisions that may affect the risk, for example, the customer’s director, the chairman or a member of the board (or other collegial management body).

  2. All of the following persons are considered the beneficial owners of the customer (trust fund):
    • the settlor(s);
    • the trustee(s);
    • the protector(s), if any;
    • natural persons benefiting from the customer, or, where such persons have yet to be determined, persons in whose interest the customer is set up or operates;
    • any other natural person exercising ultimate control over the customer by means of direct or indirect ownership or by other means.
The obligation to provide data on beneficial owners in JANGIS is provided for in the Republic of Lithuania Law on the Prevention of Money Laundering and Terrorist Financing. When establishing the identity of the customers’ beneficial owners, we are obliged to verify the data of the customers’ beneficial owners in JANGIS. If the data about the customer’s beneficial owners are not provided in JANGIS or the provided data do not correspond to the data on the customer’s beneficial owners available to us, we will not be able to open an account and provide other services to the new customer, and the existing customer may become subject to restrictions on execution of monetary transactions and/or provision of other services.

The Shareholders section should contain data on all members of the customer, along with the information on each member’s share (percentage) of the contribution. The share of voting rights held by members is not indicated.

As beneficial owners should be indicated all natural persons who hold more than 25% of the contribution, specifying the information about the held share (percentage) of the contribution, and all natural persons who hold more than 25% of the voting rights, without specifying the share of the held voting rights.

The Shareholders section should contain all the shareholders in the customer (e.g. shareholders, members).

All natural persons who own or control the customer, directly or indirectly, holding a sufficient percentage of the customer’s ownership and/or voting rights, or who control the customer in other ways should be indicated as beneficial owners. In the absence of such persons, the natural person holding the position of senior executive of the customer (e.g. the manager or the chairperson or member of the board or another governing body) should be indicated as the beneficial owner without specifying the share of ownership (voting rights).

The Shareholders section is not filled in.

As a general rule, the natural person holding the position of senior executive of the customer (e.g. the manager or the chairperson or member of the board or another governing body) should be indicated as the beneficial owner without specifying the share of ownership (voting rights).

If the Questionnaire is being completed in the Swedbank’s Internet Bank, the following text should be entered in the Comments section of the Ownership and Control Structure Information part of the Questionnaire (if applicable to the customer): “The number of shareholders of [name of the legal entity] is [number of shareholders of the legal entity]. All shareholders of [name of the legal entity] have one vote each at the meeting of shareholders of [name of the legal entity]. Information provided in this confirmation is true, complete, and accurate.”

Before submitting the data in accordance with previously specified rules, we recommend checking if each shareholder of the customer really has one vote at the meeting of shareholders of the customer.

Shareholders

Information must be provided on at least 5 shareholders with the largest shareholding (capital share) (percentage) in the customer. In the event that there are natural persons or legal entities holding 10% or more of the customer’s shares (capital shares) among the customer’s shareholders, details of such customer’s shareholders also need to be provided (i.e. even if they are not among the customer’s 5 major shareholders).

Beneficial Owners

All natural persons who own or control the customer, directly or indirectly, holding a sufficient percentage of the customer’s ownership and/or voting rights, or who control the customer in other ways should be indicated as beneficial owners. In the absence of such persons, the natural person holding the position of senior executive of the customer (e.g. the manager or the chairperson or member of the board or another governing body) should be indicated as the beneficial owner without specifying the share of ownership (voting rights).

Please note that due to legal requirements regarding KYC, the bank may in certain cases ask to provide information about all customer’s participants (e.g. shareholders, members).

Shareholders

If a municipality is indicated as the owner in the incorporation (operational) documents and state registers (information systems), the municipality should be indicated as a shareholder, indicating its classification code (https://www.registrucentras.lt/jar/p/klasif.php).

If the state is indicated as the owner in the incorporation (operational) documents and state registers (information systems), the Republic of Lithuania should be indicated as a shareholder, indicating its classification code (https://www.registrucentras.lt/jar/p/klasif.php).

The natural person holding the position of senior executive of the customer (e.g. the manager or the chairperson or member of another governing body) should be indicated as the beneficial owner without specifying the share of ownership (voting rights).

If a person who is considered to be a politically exposed person is indicated as the customer’s beneficial owner, it must be noted in the Beneficial Owners section of the Ownership and Control Structure Information part of the Questionnaire that this beneficial owner is a politically exposed person (PEP), and information related thereto must be provided.

Shareholders should be indicated only if the customer has an obligation to provide data on the shareholders in the Information System of Legal Entities Participants (JADIS).

Beneficial Owners

If a natural person is designated as the insolvency administrator, the insolvency administrator, without specifying the share of ownership (voting rights), and other beneficial owners specified in the sub-system of beneficial owners (JANGIS) of the Information System of Legal Entities Participants (JADIS) should be indicated as beneficial owners. If a legal entity has been designated as the insolvency administrator of a legal person, the natural person responsible for the insolvency proceedings, without specifying the share of ownership (voting rights), and other beneficial owners (if any) specified in JANGIS should be indicated as beneficial owners.

In the case of a legal entity in liquidation, the liquidator, without specifying the share of ownership (voting rights), and other beneficial owners specified in the JANGIS sub-system of beneficial owners of JADIS (if any) should be indicated as beneficial owners.

  • The Registration Address section of the Contact Information part must contain the address of the customer’s registered office that is registered in the Register of Legal Entities, and the Contact Address section must contain the contact address of the insolvency administrator.
  • The Economic Activity part must specify the activities performed by the customer prior to the commencement of the insolvency (liquidation) proceedings.
The owner of the individual enterprise (sole proprietorship) should be indicated as the shareholder and the beneficial owner, specifying the share of ownership (voting rights) as 100%.

If an association consists of 3 or fewer members and all of its members are natural persons:

  • All members should be indicated as shareholders.
  • All members should be indicated as beneficial owners.

If an association consists of 4 or more members:

  • The Shareholders section is not filled in.
  • As a general rule, the natural person holding the position of senior executive of the association (e.g. the chairperson of the association) should be indicated as the beneficial owner.

If the Questionnaire is being completed in the Swedbank’s Internet Bank, the following text should be entered in the Comments section of the Ownership and Control Structure Information part of the Questionnaire (if applicable to the customer): “The number of shareholders of [name of the customer] is [number of shareholders of the customer]. All shareholders of [name of the customer] have one vote each at the meeting of shareholders of [name of the customer]. Information provided in this confirmation is true, complete, and accurate.”

Before submitting the data in accordance with previously specified rules, we recommend checking if each member of the association really has one vote at the meeting of members of the association.

The Shareholders section is not filled in.

The Ambassador of the foreign country or the head of the international organisation’s representation in Lithuania should be indicated as the beneficial owner without specifying the share of ownership (voting rights).

In this case, it must be noted in the Beneficial Owners section of the Ownership and Control Structure Information part of the Questionnaire that the beneficial owner is a politically exposed person (PEP), and information related thereto must be provided.

The leader of the political party, his/her deputy(s), members of the governing bodies (e.g., board, presidium) should be indicated as shareholders.

Members of the political party holding more than 25% of the voting rights and/or other persons controlling the political party in other ways (e.g. members of the governing bodies) should be indicated as beneficial owners. If the political party does not have any members holding more than 25% of the voting rights and other persons controlling the political party in other ways, the natural person holding the position of senior executive in the political party (e.g. the leader or the chairperson or member of another governing body) should be indicated as the beneficial owner without specifying the share of ownership (voting rights).

If a person who is considered to be a politically exposed person is indicated as the customer’s beneficial owner, it must be noted in the Beneficial Owners section of the Ownership and Control Structure Information part of the Questionnaire that this beneficial owner is a politically exposed person (PEP), and information related thereto must be provided.

We request this information because we have a duty to know the ownership and control structure of the customer, including the natural persons within it, and to properly identify the customer’s beneficial owners. The request to provide such information is not a violation of the GDPR requirements, as we ask you to provide it in compliance with the legal Know Your Customer requirements. It is also important to note that the information provided by customers is safeguarded in a responsible manner, as we are committed to protecting it as a bank secret.
A Taxpayer Identification Number (TIN) is a personal identification number used for the exchange of tax information between different countries in accordance with the Common Reporting Standard (CRS) or the Foreign Account Tax Compliance Act (FATCA). The customer must indicate all Tax Residency Countries and all Taxpayer Identification Numbers corresponding to the established structure. The structure of Taxpayer Identification Numbers for different countries is provided here. In the case of a legal entity registered in Lithuania, the Taxpayer Identification Number (TIN) matches the legal entity code provided by the Register of Legal Entities.

The collection of the information on natural persons and legal entities and their beneficiaries who are potential foreign taxpayers is regulated by:

  • Agreement between the Government of the Republic of Lithuania and the Government of the United States of America to Improve International Tax Compliance and to Implement Foreign Account Tax Compliance Act (FATCA), according to which all financial institutions must collect information on the Tax Residence Countries and Taxpayer Identification Number (TIN) of customers and their beneficial owners;
  • the Law on Tax Administration of the Republic of Lithuania, and Resolution No. 1017 of 23-09-2015 of the Government of the Republic of Lithuania and other by-laws implementing the Common Reporting Standard (hereinafter – CRS) developed by the Organization for Economic Co-operation and Development (OECD), which governs the exchange of tax information between CRS-compliant countries.
Failure to provide information related to the payment of taxes to the bank or the provision of false data may be subject to administrative liability in accordance with Article 198-1 of the Code of Administrative Offences of the Republic of Lithuania.

Banks operating in Lithuania are obliged to inform VMI (Valstybinė mokesčių inspekcija – the State Tax Inspectorate of Lithuania) about customers who are or may be potential taxpayers in foreign countries. This obligation is specified by the following legislation:

  • FATCA – Foreign Account Tax Compliance Act. This law is applied pursuant to an international treaty between the Republic of Lithuania and USA, whereby it is required that financial institutions in the Republic of Lithuania should provide1 information about customers who are taxpayers in USA. The Republic of Lithuania is required to implement this treaty as part of its Law on International Treaties;
  • Compliance with the legislation mentioned above is specified in detail, with a comprehensive description of banks’ obligations, in the Republic of Lithuania Law on Administration of Taxation, in Resolution No. 1017 of 23 September 2015-09-23 of the Government of the Republic of Lithuania and in other subsequent legislation, which can be perused on the VMI website www.vmi.lt.
  • The CRS (Common Reporting Standard) regulates exchange of taxation information between countries that observe the CRS (a list of them can be found here). Banks operating in Lithuania have been obliged since 2017 to supply1 the VMI with information about natural persons and legal entities that are or may be taxpayers in CRS countries. VMI provides this information to the taxation institutions of the relevant countries.

1 The reporting exception based on FATCA or CRS reporting requirements could be applied in cases mentioned below if customer made relevant notes in his Questionnaire:

  • As a full-time employee of an international organization (e.g., NATO, World Bank, European Commission, etc.);
  • By reason of diplomatic status (a person assigned to a diplomatic post or a position in a consulate or embassy, etc.);
  • By reason of a visa – applicable for USA only in case of visa “A-3”, “G-5”, “F”, “J”, “M” and “Q” types.

General information abouy international sanctions

International Sanctions are restrictive non-military measures put in place in order to preserve the international peace and security, as well as respect for human rights.
They are imposed by the United Nations (UN), the European Union (EU) or by individual countries (e.g. the United States (U.S.), the United Kingdom (UK)). International Sanctions are imposed against entire states, as well as natural persons and legal entities, who violate the human rights, commit religious, ethnical, territorial conflicts, support terrorism, violate other international norms and principles.
The purpose of International Sanctions is to influence a change of behaviour, to stop prohibited activities or to restrain the sanctioned person. International Sanctions take various forms based on their purpose objective (e.g. to prevent armed conflict, counter terrorism). They can be individual (e.g. travel ban, asset freeze), target goods and services (e.g. arms embargoes or proliferation-related goods, dual-use goods), can be focused on core economic sectors (e.g. oil or financial sectors) or be comprehensive targeting entire country (e.g. North Korea).
Swedbank, as well as other financial institutions, implements International Financial Sanctions. It has to be pointed out that depending on the countries where the financial institutions operate, the lists of sanctions which the financial institutions follow could slightly differ.

  • UN sanctions. All UN members are obliged to accept and carry out Resolutions passed by UN Security Council.
  • EU sanctions. Sanctions are implemented through EU Council Regulations and have direct effect in all EU member states.
  • Swedbank also implements relevant Financial Sanctions based on the Swedbank Group Policy on Financial Sanctions:
  • U.S. financial sanctions. U.S. ** financial sanctions are imposed by U.S. President Executive Orders and implemented by the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury.
  • UK financial sanctions. UK financial sanctions are implemented by the Office of Financial Sanctions Implementation (OFSI).

By following U.S. Financial Sanctions, Swedbank is being able to keep and maintain relations with banks in U.S. jurisdiction and provide to its customers transactions and other products/services in USD currency or transactions related to U.S. persons.

Links:

Swedbank implements above mentioned International Sanctions to the extent determined by the UN, the EU, the U.S., the UK or state bodies (i.e. Government) and according to the Swedbank Group Policy on Financial Sanctions. Additionally, Swedbank considers correspondent banks requirements, as well as its own risk appetite. Therefore, Swedbank will not engage in any actions that directly or indirectly evade the Financial Sanctions prohibitions, correspondent banks requirements and Swedbank’s internal decisions.

Below are provided major types of International Sanctions implemented within Swedbank:

In case of imposed above mentioned sanctions Swedbank will reject transaction or will not provide any related products/services.

  • Arms embargoes/restrictions on dual-use goods and technology and related activities for military purposes (Defence sector). The same embargoes/restrictions can be imposed also for other goods (e.g. equipment used for internal repression, telecommunications’ monitoring and interception equipment). Swedbank is obliged not to participate in provision of financial assistance related to mentioned goods or related services.
  • Core economic sector sanctions.

    Financial and energy sectors of the Russian Federation are affected by these types of sanctions:

    • Restrictions to provide access to capital markets and restrictions to issue new loans or credits to companies under Sectoral Sanctions (EU,U.S. and UK);
    • Restrictions on certain items used in the oil industry (EU, UK) and restrictions on goods/services for projects that have potential to produce oil in any location (U.S).

    Sanctions imposed on Belarus by the EU:

    • prohibition to sell, supply, transfer or export to anyone in Belarus, directly or indirectly, equipment, technology or software intended primarily for use in the monitoring or interception of the internet and of telephone communications as well as dual-use items and technology intended for military use;
    • trade restrictions concerning petroleum products, potassium chloride and goods used for the production or manufacturing of tobacco products;
    • restricted access to EU capital markets and prohibition to provide insurance and reinsurance to the Belarusian Government and Belarusian public bodies and agencies.

Swedbank will not provide any financial services restricted (e.g. loans, credits, dealings in financial instruments), as well as will not participate in any transactions related to prohibited activities (e.g. restrictions on provision, exportation, or reexportation of goods/services or technology in support of exploration or production for deepwater, Arctic offshore, or shale projects that have the potential to produce oil).

  • Comprehensive sanctions against defined countries/regions.g. North Korea is comprehensively sanctioned by the UN, the EU, the UK and the U.S.

It is important to mention that the asset freeze and some sectoral restrictions are also applicable to legal entities that are owned or controlled, directly or indirectly, by a designated person. Although those legal entities may not be designated and included into sanctions lists, the same sanctions are applicable for them and needed to be implemented by Swedbank.

EU imposed International Sanctions (including implemented UN sanctions) apply within the territory of EU and to all EU persons inside or outside the territory of EU. Thus, both financial institutions and their customers are legally responsible for complying with the EU sanctions and have the obligation to inform the competent authorities on the cases they know or suspect transactions with sanctioned subjects. Swedbank will always inform the competent authorities in case of breach of the EU Sanctions and freezing of funds. Examples when reporting is necessary:

  • The customer identifies that its partner or customer is the EU sanctioned person;
  • The customer identifies that beneficial owner of the legal entity which buys goods/services is the EU sanctioned person;
  • Etc.

As a low risk bank, Swedbank expects that its customers are aware of their business exposure towards International Sanctions, in order to avoid measures which could negatively affect their activities.

When the business activities extend to foreign countries, Swedbank advises its customers to assess potential risks related to International Sanctions before involving themselves in business relationships or transactions. Even if no embargoes or restrictions are imposed against a particular country, Swedbank recommends to evaluate if goods/services could be made available to or for the benefit of a sanctioned subjects. It is prohibited to make available funds or other assets to sanctioned subjects directly or indirectly.

International Sanctions are generally widely publicised, and customers have to understand and take actions regarding International Sanctions that might be relevant for them. Therefore, in case business activities involve foreign countries, in order to better mitigate the risks related to International Sanctions Swedbank advises its customers to take appropriate risk-mitigation steps:

  • to check what UN, EU, UK and U.S. sanctions, as well as sanctions imposed by the local country are applicable for the particular country;
  • to perform due diligence on their partners and customers;
  • to discuss sanctions with their partners and customers;
  • to consult responsible authorities or seek independent legal advice in case of any questions or doubt related to implementation of International Sanctions.

More information on EU sanctions and frequently asked questions can be found in the guidelines prepared by the Centre of Excellence in Anti-Money Laundering.

Useful information about international sanctions is also published on the website of the Ministry of Foreign Affairs of Lithuania.

Sanctions and Prohibited Countries and Territories

In implementing International Sanctions, Swedbank decisions and correspondent banks requirements, Swedbank has the obligation and the right not to execute payment transactions (including the crediting of funds) in any currencies, directly or indirectly related to the following countries or regions (hereinafter referred to as Prohibited Countries):

  1. Iran;
  2. Syria;
  3. North Korea;
  4. Cuba;
  5. Crimea and Sevastopol;
  6. Russian Federation;
  7. Republic of Belarus;
  8. Venezuela;
  9. Afghanistan;
  10. The territories of Ukraine's Donetsk, Luhansk, Kherson, and Zaporizhzhia regions not controlled by the Ukrainian government.

Additional restrictions on executing payment transactions

Taking into account the ongoing war in Ukraine, the current geopolitical situation, as well as international sanctions and other restrictive measures, Swedbank has decided to deem unacceptable any cash and non-cash transactions, including payments with payment cards, in its customers' accounts if they are related to transactions that have a direct and/or indirect connection with Prohibited Countries, natural persons residing and/or operating in these countries, legal entities established and/or operating in these countries, as well as goods and services originating from Prohibited Countries.

Swedbank will consider cash and non-cash transactions in its customers' accounts with any of the above-mentioned direct and/or indirect connection with Prohibited Countries as unacceptable, for example (the provided list of examples is not exhaustive):

  • the crediting of funds with any direct and/or indirect connection with Prohibited Countries and/or natural persons residing and/or operating in them, legal entities established and/or operating in Prohibited Countries, or goods and services originating from these countries, into customers' accounts held with Swedbank, whether from customers' accounts in other financial institutions or from third-party accounts in other financial institutions;
  • the deposit of cash obtained from the sale or rental of property, goods, and/or services in Prohibited Countries, dividends from legal entities established and/or operating in Prohibited Countries, funds related to employment in companies, institutions, and/or organizations established and/or operating in Prohibited Countries, professional and/or individual activities in Prohibited Countries, as well as savings accumulated in these countries, into our customers' accounts held with Swedbank;
  • credit transfers (both local and international) from our customers' accounts held with Swedbank that have any direct and/or indirect connection to Prohibited Countries or natural persons residing and/or operating in them, legal entities established and/or operating in Prohibited Countries, or goods and services originating from these countries.

All cash and non-cash transactions identified in our customers' accounts that have any of the above-mentioned direct and/or indirect connection with Prohibited Countries and which may be deemed unacceptable, will be assessed on an individual basis.

In assessing if payment transaction is related to the Prohibited Countries Swedbank will also investigate, in addition to the already mentioned connections, whether:

  • the payment transaction is related to natural persons or legal entities residing/established and/or operating in any of the Prohibited Countries. The connection could be direct (e.g. funds are received from the natural person or legal entity residing/established and/or operating in any of the above-mentioned countries and/or regions) or indirect (e.g. funds are received from a natural person or legal entity who is not residing/established and does not operate in any of the above-mentioned countries and/or regions, but goods are sent and/or services are provided to a natural person or legal entity residing/established and/or operating in any of the above-mentioned countries and/or regions.);
  • the payment transaction is related to shell companies that help to avoid direct or indirect connection with Prohibited Countries;
  • the information provided in the payment transaction details could be related to Prohibited countries (e.g. the name and surname of a natural person or the name of a legal entity, the name of a ship, port, city, etc.);
  • the payment transaction lacks substantial information to understand the transaction’s purpose.

We would like to remind you that Swedbank complies with all United Nations, European Union, the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury and the United Kingdom of Great Britain and Northern Ireland sanctions and other restrictive measures requirements.

In addition to the already mentioned Prohibited Countries, Swedbank may restrict payment transactions to/from the countries and/or regions listed below (the list is not exhaustive, as international sanctions and other restrictive measures and their scope are constantly changing):

  1. Iraq;
  2. Myanmar (Burma);
  3. Libya;
  4. Sudan and South Sudan;
  5. Yemen;
  6. Somalia;
  7. Transnistria region.

Additional information

We would like to draw your attention to the fact that the term of executing payment transaction (both credit transfer and crediting of funds) may be extended, or international payment transaction may be blocked or frozen by other banks which also participate in the execution of transaction (correspondent bank, bank of beneficiary or sender). Therefore, the customers should always evaluate potential International Sanctions and other restrictive measures risks by themselves.

Swedbank would like to draw your attention to the wide-ranging (comprehensive) international sanctions imposed by both the EU and the US in relation to Crimea and non-government controlled Ukrainian territories (Donetsk, Luhansk, Kherson, Zaporizhia). These sanctions include restrictions and prohibitions on imports, exports, investment and financing in relation to these regions.

Due to the current situation, Swedbank’s internal decisions, and the requirements of correspondent banks, Swedbank will not, as a rule, execute international monetary transactions (credit transfers and crediting of funds, which may be directly and/or indirectly related) in any currency to/from these regions or related to these regions (e.g. if the indicated address of the beneficiary is in Donetsk).

Both the EU and the U.S. have imposed sanctions against the administrative bodies of the Lugansk and Donetsk regions, as well as subjects closely linked to such bodies. Execution of monetary transactions, the addresses and details of which contain any reference to the respective regions and entities registered therein, may take longer or their execution may be refused due to the restrictions and prohibitions in place.

Both the EU and the U.S. have imposed restrictive measures (Sectoral Sanctions) on the access to new capital markets and new credits to specific Russian banks (i.e. Gazprombank, Russian Agricultural Bank, Sberbank of Russia, Vnesheconombank, VTB Bank, etc.). Swedbank has to ensure that international monetary transactions related to the specified banks do not violate the restrictions imposed. As a result, Swedbank may conduct additional investigations into the related monetary transactions. Since it is difficult to detect the monetary transactions associated with concealed financing, the execution of the payment order may be delayed.

  • On 19 April 2021, US OFAC introduced new restrictions against 9 Belarusian businesses. The list of companies is provided on the official OFAC website. Sanctions are also imposed on companies and/or entities, in which listed sanctioned Belarusian companies own 50% or a larger part of shares.
  • On 21 June 2021, the EU adopted new restrictive measures concerning 78 Belarusian individuals and 8 companies. Sanctions are also imposed on companies and/or entities, in which sanctioned companies and/or individuals have control functions and/or own 50% or a larger part of shares. Important! Exceptions regarding payments with a risk of EU sanctions are granted by the Financial Crime Investigation Service under the Ministry of the Interior of the Republic of Lithuania in accordance with the Ministry of Foreign Affairs of the Republic of Lithuania’s decision.
  • On 24 June 2021, the EU adopted further targeted (sectoral) sanctions against Belarus. Targeted economic sanctions include the prohibition to sell, supply, transfer or export to anyone in Belarus, directly or indirectly, equipment, technology or software intended primarily for use in the monitoring or interception of the internet and of telephone communications as well as dual-use items and technology intended for military use. In addition, trade restrictions concerning petroleum products, potassium chloride and goods used for the production or manufacturing of tobacco products were introduced. Furthermore, access to EU capital markets is restricted and providing insurance and reinsurance to the Belarusian Government and Belarusian public bodies and agencies is prohibited. Important! The Centre of Excellence in Anti-Money Laundering has prepared information for Lithuanian businesses specifying what to pay attention to while implementing targeted (sectoral) sanctions imposed on Belarus by the EU. You can find it here.
  • On 9 August 2021, US OFAC adopted further restrictions against 23 Belarusian individuals and 21 business entities. The list of individuals and companies as well as other useful information is provided on the official OFAC website. Sanctions are also imposed on companies and/or entities, in which listed sanctioned companies and/or individuals own 50% or a larger part of shares.
  • On 2 December 2021, the EU and OFAC imposed new sanctions on high-ranking political officials of the Belarusian regime; Belarusian companies in the industrial and defense sectors, and companies in the tourism sector that helped organize and instigate illegal crossings of the EU’s borders. EU press release and list of newly sanctioned natural and legal persons. OFAC press release and list of newly sanctioned natural and legal persons.

Please note that Swedbank and its clients must respect international financial sanctions:

  • when making payment transfers that are potentially related to Belarus, please assess whether the payment complies with international financial sanctions requirements, make sure to have documents justifying that and be ready to provide Swedbank with them (e.g., cooperation agreement, agreement between the parties participating in goods transportation, invoices, waybills, references of goods, certificates of origin, primary buyer, final beneficiary, etc.);
  • due to information provided above, payment transfers that are potentially related to Belarus (including crediting of funds) may be delayed and/or declined, in some cases restricting access to payment funds and other assets.

Military goods cover military technology and equipment which might be used for internal repression or international aggression or contribute to regional instability.

Dual-use goods are items, including software and technology, which can be used for both civil and military purposes, and shall include all goods which can be used for both non-explosive uses and assisting in any way in the manufacture of nuclear weapons or other nuclear explosive devices.

Usually when arms embargoes/restrictions on dual-use goods are imposed, related technical, financial assistance, as well as other services are also prohibited. Although the primary responsibility for the classification of goods and technologies lies with the customers sending or receiving such items, the prohibition to provide financial assistance is also mandatory for financial institutions, it means for Swedbank as well.

The prohibition on military goods/dual-use goods means that Swedbank cannot participate in any financial transactions, provide business support or any financial support to customers that sell, supply, transfer, mediate or export such goods to restricted countries/regions (e.g. the Russian Federation), if they are intended for military purposes, or sell, supply, transfer or export such goods to the certain EU listed subjects. Therefore, Swedbank could conduct additional investigations on related transactions. Thus, the fulfilment of the payment order may be delayed.

There are items related to energy sector listed by EU which are restricted to be exported to the Russian Federation. U.S. has imposed restrictions on all goods/non-financial services or technology in support of energy projects. Therefore, Swedbank must be aware if the customer has an authorization from authorities in order not to be involved in prohibited transactions.

Links:

Please note, if you or your company operate(s) in the field of shipping or are (is) connected to mentioned field of activity, then according to international shipping area regulations it is mandatory to add the following information to the field “details of payment”:

  • M/V: name of the ship;
  • IMO: international maritime organisation number;
  • FLAG: flag state;
  • OWNERSHIP: name of the owner;
  • REGISTRATION: number and the country.

Otherwise, transaction might be delayed since the missing details will be inquired from the bank of payer. If transaction is not performed in accordance with international standards (including the U.S. legal acts) transaction might be frozen in the correspondent bank.

Swedbank classifies field of Transportation as a high-risk industry by the reason of possible transportation of sanctioned goods (e.g. Military goods, Dual-use goods, Goods related to energy sector) and provision of services which are prohibited by UN, EU or U.S. requirements.

Please note, if you or your company operate(s) in the field of transportation or are (is) connected to mentioned field of activity, then you will be required to provide following information to Swedbank:

  • Information regarding transported goods (including, but not limited to the following: certificates of origin of goods, bills, invoices, transportation documents (e.g. rail, airway bills), etc.);
  • Information regarding final destination/final beneficiary of goods (beneficiary name, registration number, country, address);
  • Information regarding consignor (consignor name, registration number, country, address);
  • Etc.

N.B.

If Swedbank requests you to provide information/documents and received information/documents will not include all necessary information, the fulfilment of the payment order might be delayed.

Swedbank does not tolerate situations when transaction data (i.e. beneficiary’s name/surname, address, etc.) is altered or stripped in order to bypass Swedbank risk mitigation measures or conceal potential links with subjects to International Sanctions.

Therefore, if your company operates in countries, which are included in Swedbank’s binding sanctions lists, you may be required to submit information regarding risks related to International Sanctions internal control system measures taken within your company.

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„Swedbank”, AB
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