Prevention of money laundering

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 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.

All the data that you submit to us is subject to strict security and confidentiality regulations.

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 to receive information from the bank and such rights are supported by legislation.

In what cases do companies have to provide information about foreign beneficial owners?

If at least one of a company’s beneficial owners (a person who owns or somehow controls more than 25% of a company’s capital) is a citizen or taxpayer of USA or another foreign country, the company must supply information about his place of residence and citizenship, by completing Customer Questionnaire for Legal Entities.

You will find more information here:

• IRS website
• OECD website
• website of VMI (State Tax Inspectorate of the Republic of Lithuania – Ministry of Finance)

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.

• In the part of the Questionnaire dealing with “Information about the ownership and control structure”, in the section headed “Shareholders” it is necessary to provide information about all the client’s shareholders.
• In the part of the Questionnaire dealing with “Information about the ownership and control structure”, in the section headed “Beneficial owners” it is necessary to provide information about natural persons having direct or indirect control of more than 25% of the client’s shares (portion of capital) or voting rights or direct or indirect control of the client by other means. If there are no such people, the beneficial owner should be designated as the person filling the position of Manager or CEO of the client company, specifying what percentage of the shares he/she holds.

The shareholders are not specified in the questionnaire’s part named “Ownership and Control Structure Information”, “Shareholders” section.

The natural person in the customer’s senior management position (e.g. CEO) should be listed as the beneficial owner in the questionnaire’s part named “Ownership and Control Structure Information”, “Beneficial owners” section, without specifying part of shares.

If the questionnaire is being completed in the Swedbank internet banking, the following text should be written by the customer in the questionnaire’s part named “Ownership and Control Structure Information”, “Comments” section: “The number of shareholders of [name of customer] is [number of shareholders]. All shareholders of [name of customer] have one vote each at the meeting of [name of customer] shareholders.”

Note! We recommend that before submitting information in accordance with previously specified rules, we recommend to check if each shareholder really has one vote at the customer’s shareholders’ meeting.

Note! If the Customer Questionnaire for Legal Entities is being filled in by a customer (legal entity) whose legal form is a political party, please find additional information here.

Details of at least 5 of the customer’s major shareholders need to be provided in the questionnaire’s part named “Ownership and Control Structure Information”, “Shareholders” section. In the event that among customer’s shareholders there are natural persons or legal entities holding 10% or more of the customer’s shares (capital share), details of such customer’s shareholders also need to be provided in the questionnaire’s part named “Ownership and Control Structure Information”, “Shareholders” section (i.e. even if they are not among the customer’s 5 major shareholders).

Details of natural persons who directly or indirectly own or control more than 25% of the customer’s shares (capital share) or voting rights or directly or indirectly control the customer by other means need to be provided in the questionnaire’s part named “Ownership and Control Structure Information”, “Beneficial owners” section. If there are no such persons, the natural person in the customer’s senior management position (e.g. CEO) should be listed as the beneficial owner, without specifying part of shares.

Note! Please note that due to legal requirements regarding Know your customer, Swedbank may in certain cases ask to provide information about all customer’s shareholders.

• Since a political party can have a large number of members, naming them all is not in practice very expedient; so in the part of the Questionnaire dealing with “Information about the ownership and control structure”, in the section headed “Shareholders”, the shareholders shall be shown as those members who have an effective influence on the management of the political party: the leader of the political party, his assistant(s) and the party’s management organs.
• ln the part of the Questionnaire dealing with “Information about the ownership and control structure”, in the section headed “Beneficial owners”, the beneficial owner should be shown as the person filling the position of Senior Executive (e.g. the leader of the political party), without showing the number of shares.
• If the person shown as the beneficial owner is considered to be a politically exposed person (as specified earlier), in the part of the Questionnaire dealing with “Information about the ownership and control structure”, in the section headed “Beneficial owners”, it should be shown that the beneficial owner is a politically exposed person (PEP), and appropriate relevant information about this should be supplied.

The following information should be provided in the questionnaire’s part named “Ownership and Control Structure Information”, “Shareholders” section:

• When it is specified in the instruments of incorporation or in the public register that the proprietor/shareholder of a legal entity is a municipality, then that municipality should be listed as the shareholder providing its classification code (https://www.registrucentras.lt/jar/p/klasif.php).
• When it is specified in the instruments of incorporation and in the public register that the proprietor/shareholder of a legal entity is a municipal council, then the corresponding municipality should be listed as the shareholder providing its classification code (https://www.registrucentras.lt/jar/p/klasif.php).
• When it is specified in the instruments of incorporation and in the public register that the proprietor/shareholder of a legal entity is a state, then the Republic of Lithuania should be listed as the shareholder providing its classification code.
• When it is specified in the instruments of incorporation and in the public register that the proprietor/shareholder of a legal entity is a municipal administration, then that municipal administration should be listed as the shareholder providing its legal entity code.
• When it is specified in the instruments of incorporation and in the public register that the proprietor/shareholder of a legal entity is a particular ministry of the Republic of Lithuania, then that particular ministry of the Republic of Lithuania should be listed as the shareholder providing its legal entity code.

The natural person in the customer’s senior management position (e.g. CEO) should be listed as the beneficial owner in the questionnaire’s part named “Ownership and Control Structure Information”, “Beneficial owners” section, without specifying part of shares.

In the event that customer’s legal form is a state enterprise (VĮ) or a municipal enterprise (SĮ), and a person considered to be politically exposed (e.g. the leader or a member of another governing organ) is listed as the beneficial owner, it should be indicated in the questionnaire’s part named “Ownership and Control Structure Information”, “Beneficial owners” section that the beneficial owner is a politically exposed person (PEP), and appropriate relevant information should be provided.

When the owner and manager of an individual enterprise are the same person:

• Under “Representatives” in the Questionnaire, the owner/manager of the individual enterprise should be specified;
• In the part of the Questionnaire dealing with “Information about the ownership and control structure”, in the section headed “Shareholders”, the shareholders shall be shown as the owner/manager of the individual enterprise, specifying their 100% ownership of the shares;
• ln the part of the Questionnaire dealing with “Information about the ownership and control structure”, in the section headed “Beneficial owners”, the beneficial owner should be shown as the owner/manager of the individual enterprise, specifying their 100% ownership of the shares;

When the owner and manager of an individual enterprise are different people:

• Under “Representatives” in the Questionnaire, the manager of the individual enterprise should be specified;
• In the part of the Questionnaire dealing with “Information about the ownership and control structure”, in the section headed “Shareholders”, the shareholder shall be shown as the owner of the individual enterprise, specifying his 100% ownership of the shares;
• ln the part of the Questionnaire dealing with “Information about the ownership and control structure”, in the section headed “Beneficial owners”, the beneficial owner should be shown as the owner of the individual enterprise, specifying his 100% ownership of the shares.

• In the part of the Questionnaire dealing with “Information about the ownership and control structure”, in the section headed “Shareholders”, the shareholder is not specified.
• In the part of the Questionnaire dealing with “Information about the ownership and control structure”, in the section headed “Shareholders”, the shareholder is shown as the Ambassador of the foreign country, and no percentage of shares is specified. In these cases, it should be shown that the beneficial owner is a politically exposed person (PEP), and appropriate relevant information about this should be supplied.

• The section “Registration address” of the section “Contact information” specifies the address that is the address of the customer’s office, registered in the Register of Legal Entities, and the section “Contact address” specifies the address that is the bankruptcy administrator’s contact address.
• In the part of the Questionnaire dealing with “Information about the ownership and control structure”, in the section headed “Shareholders”, the shareholder is not specified.
• In the part of the Questionnaire dealing with “Information about the ownership and control structure”, in the section headed “Beneficial owners” the beneficial owner should be shown as the bankruptcy administrator without indicating the part of shares.
• The section “Economic activity” specifies the activities performed by the customer prior to the commencement of the bankruptcy process.

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

• Details of all members are to be specified in the questionnaire’s part named “Ownership and Control Structure Information”, “Shareholders” section.
• All members are to be specified as beneficial owners in the questionnaire’s part named “Ownership and Control Structure Information”, “Beneficial owners” section.

If an association consists of 4 or more members:

• The shareholders are not specified in the questionnaire’s part named “Ownership and Control Structure Information”, “Shareholders” section.
• The chairperson of an association of owners of multi-apartment residential buildings or other types of buildings, an association of garage owners or an association of gardeners is to be specified as the beneficial owner in the questionnaire’s part named “Ownership and Control Structure Information”, “Beneficial owner” section.
• If the questionnaire is being completed in the Swedbank internet banking, the following text should be written by the customer in the questionnaire’s part named “Ownership and Control Structure Information”, “Comments” section: “The number of shareholders of [name of customer] is [number of shareholders]. All shareholders of [name of customer] have one vote each at the meeting of [name of client] shareholders.”

Note! Before submitting information in accordance with previously specified rules, we recommend to check if each shareholder really has one vote at the customer’s shareholders’ meeting.

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. Information on politically exposed persons is collected as 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 a family member or immediate helper of a politically exposed person, you must supply the required information about this politically exposed person.

In order to get to know our customers and to maintain a business relationship based on mutual trust, we ask our customers to cooperate with us and with other responsible authorities (such as the State Enterprise Registers Centre), updating and providing relevant information about themselves, including accurate contact information, in case it is necessary to contact them.

We also urge our business customers to consider the possibility of having internal documents covering such matters as the fight against corruption and terrorist financing, sanctions, money laundering prevention policies and a corporate code of behaviour.

Money laundering is activity aimed at hiding or obfuscating the true source of illegally obtained funds or other assets.

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 essential measures to block the path of this illegal activity.

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, as appropriate, Customer Questionnaire for Natural Persons or 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 customers, as 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

If the bank is not provided with the necessary information or requested documents (and even if they are provided, but they do not answer the questions), in some cases the bank will no longer be able to provide you with services, e.g. it may refuse or suspend the execution of monetary operations or transactions, or apply restrictions on the use of the account, card(s), Internet banking.

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 necessary information or documents. In addition, if the bank does not receive the required information (or requested documents) from you, it may terminate its business relationship with you.

Special attention is paid to business customers, as the company's cash can be used to avoid paying taxes and to participate in VAT avoidance schemes.

Cash can also be used for paying undeclared wages, which can have a negative impact on a country’s economic growth and can reduce workers’ 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.

In order to get to know our customers and to maintain a business relationship based on mutual trust, we ask our customers to cooperate with us and with other responsible authorities (such as the State Enterprise Registers Centre), updating and providing relevant information about themselves, including accurate contact information, in case it is necessary to contact them.

We also urge our business customers to consider the possibility of having internal documents covering such matters as the fight against corruption and terrorist financing, sanctions, money laundering prevention policies and a corporate code of behaviour.

In compliance with the requirements of current legislation, the Bank must know and understand the origin (source) of a client's funds/assets, therefore the Bank must be provided with documents confirming the legal origin (source) of the funds/assets.

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

• if the origin of the 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/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 of the form and content prescribed by law;
• if the origin (source) of the funds/property is the sale of real estate, the origin (source) of the funds/property can be confirmed by a payment order or other document confirming the fact of money transfer and a purchase-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/property not included in this list.

• 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:

• S. OFAC sanctions regimes,
• S. OFAC search tool,
• S. OFAC Specially Designated Nationals List.

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:

• Targeted asset freezes. These Financial Sanctions apply to targeted natural persons and legal entities (blocked persons) by restricting their access to funds and other assets. Targeted asset freezes or other actions are required in case blocked persons are included into the following official sanctions’ lists:
• EU Consolidated list of sanctions
• S. The Office of Foreign Assets Control Specially Designated Nationals and Blocked Persons List (U.S. OFAC SDN List)
• HM Treasury (UK) consolidated list of sanctions..

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.

Due to International Sanctions, Swedbank’s internal decisions and correspondent banks requirements, Swedbank has the right not to execute transactions (including crediting of funds) in any currencies directly and indirectly (e.g., the final consignee is located in the country/region) related to the EU and/or U.S. comprehensively sanctioned countries/regions:

1. Iran;
2. Syria;
3. North Korea;
4. Cuba;
5. Crimea, Sevastopol.

Swedbank may also hold the customer’s transaction to/from any country/region where embargoes, other restrictive measures are imposed or to/from other high-risk countries/regions in order to investigate whether this transaction is not related to International Sanctions and is in line with correspondent banks’ requirements, as well as with Swedbank’s internal decisions and its own risk appetite. The execution of stopped international transactions may be delayed and customers may be asked to provide additional information and/or documents about their transactions because of such investigation.

List of countries or regions which are subject to international sanctions or to which Swedbank may restrict payments (this list is not exhaustive, as international sanctions may be withdrawn or new ones introduced, and their scope may change):

1. Iraq;
2. Myanmar (Burma);
3. Libya;
4. Sudan and South Sudan;
5. Yemen;
6. Somalia;
7. Transnistria region;
8. Lugansk/ Donetsk;
9. Kherson;
10. Zaporizhzhia;
11. Afghanistan;
12. Etc.

In assessing if transaction is related to the above-mentioned countries/regions Swedbank will investigate connections to imposed International Sanctions and analyse additionally:

• If transaction is related to a counterparty located or operating in one of the above-mentioned countries/regions. The relation could be direct (e.g. transaction is received from the sender with the address in Crimea) or indirect (e.g. transaction is received from other country (e.g. Turkey) but goods are being sent to Syria);
• If transaction is related to front companies which help to avoid direct connection to the above-mentioned countries/regions;
• If information provided in transaction details could be linked to the above-mentioned countries/regions (e.g. person name, vessel, name of city, harbour etc.);
• If transaction lacks a substantial information to understand the transaction’s purpose;
• Etc.

Additional observations

Swedbank would like to draw your attention to the fact that the term of executing international transaction (including crediting of funds) may be extended, or international 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 risks by themselves.

Swedbank would like to draw your attention to the fact that both the EU and the U.S. imposed broad (comprehensive) International Sanctions related to Crimea and Sevastopol regions. These sanctions cover restrictions and prohibitions on imports, exports, investments and financing in relation to these regions.

Due to the current situation, Swedbank’s internal decisions and correspondent banks requirements, Swedbank will not, as a rule, perform international transactions (both outgoing and incoming) to these regions or related to these regions (e.g. beneficiary address is indicated in Crimea) in any currencies.

There are restrictive measures (Sectoral Sanctions) adopted by the EU and the U.S. on access to the capital market and new credits to defined Russian banks (i.e. Gazprombank, the Russian Agricultural Bank, Sberbank of Russia, Vnesheconombank, VTB Bank etc.). Swedbank has to ensure that international transactions related to the mentioned banks do not violate restrictions imposed. Therefore, Swedbank could conduct additional investigations on related transactions. As transactions associated with concealed financing are difficult to detect the fulfilment of the payment order may be delayed.

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 transactions, the addresses and details of which contain any reference to the respective regions and subjects registered there, may take more time or their execution may be refused, due to the restrictions and prohibitions in place.

• 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:

• Common Military List of EU.
• Council Regulation (EC) setting up a Community regime for the control of exports, transfer, brokering and transit of dual-use items,
• Council Regulation (EU) concerning restrictive measures in view of Russia's actions destabilising the situation in Ukraine.

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.