Prevention of money laundering

We ask you to provide us with revenue data so that we can better understand the origin of the funds in our clients’ accounts, as well as whether the transactions you perform match your income. This helps us get to know our customers better and makes it easier to ensure the security of our customers' funds.

Laws and market surveillance institutions require us to know to whom the bank is providing its services. The Questionnaire is therefore the first step in getting to know our customers better and getting the information required by law.

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), which governs the exchange of tax information between CRS-compliant countries.

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.
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 provide 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 supply 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.

Possible US taxpayers

FATCA requirements have been applied in Lithuania since 01-07-2014, and these require all banks operating in Lithuania to identify possible US taxpayers and to inform the VMI about these customers. VMI has to pass this information on to the US Internal Revenue Service (IRS).
Those considered to be possible US taxpayers include:

• citizens;
• Individuals who were born in USA;
• Individuals who hold a “Green Card” for residence in USA.
• Individuals who have been living in the USA for a certain period of time (with certain exceptions);
• Individuals who meet certain criteria specified in the FATCA legislation.
  

What to do if you are a US taxpayer

Please complete the Customer Questionnaire for Natural Persons on our Internet banking page, or come to any branch of Swedbank and indicate the American TIN (Tax Identification Number) that has been assigned to you by IRS.

What to do if you are a taxpayer of a CRS country?

Please complete the Customer Questionnaire for Natural Persons on our Internet banking page or come to any branch of Swedbank and specify which country you are a taxpayer of, the taxpayer identification number assigned to you by that country and any other information requested.

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.

These clarifications are aimed for you, if you are independently completing the Customer Questionnaire for Natural Persons (hereinafter referred to as the Questionnaire) of “Swedbank”, AB (hereinafter referred to as the Bank) upon the Bank’s request, and if you are uncertain as to what information Bank requests and where you could find it independently. The questionnaire is compulsory for opening a bank account or renewal of your information.

You can always use the possibility to consult with the Bank employees. You can do this by calling to the +370 5 268 4444 or by visiting any subdivision of 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 18 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 State 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.

If the name change is registered in Lithuania, the bank will change your name based on the data of the Population Register of the Republic of Lithuania. This will not affect the use of your account(s) or services in any way.

We recommend informing the persons and institutions that make transfers to you about your new name. Transfers under your old name can be made for six months. After six months, transfers can only be made under your new name.

We recommend changing your payment card before traveling abroad. Otherwise, the name on your payment card will be changed when renewing the current payment card once it expires.

If the name change is not registered in Lithuania, please provide the necessary documents confirming the change of name. You can do this by booking an appointment in advance to visit our customer service unit.

At Swedbank, we strive to take full care of our customers' financial security and to implement the international principle "Know Your Customer". Therefore, we must perform the appropriate statutory checks before opening accounts for new customers. Here are answers to some common questions about opening accounts for non-resident students.

1. What documents do I have to submit when applying to open a bank account?

You have to submit these documents when applying to open a bank account:

• personal identity document, such as foreign passport, EU citizen's identity card or a diplomatic passport;
• residence permit (permanent or temporary) for residence in the Republic of Lithuania. Without such a permit, you would have to provide a document confirming your involvement with Lithuania, e.g., a study agreement from a Lithuanian university;
• you will need to fill in the Customer Questionnaire for Natural Persons by arriving at the bank branch.
2. Why are bank accounts not opened straight away, and why do I have to wait?

Before opening an account for a new client, we need to assess all the information provided in the Customer Questionnaire for Natural Persons and to understand the purpose for which the new account will be opened. We also need to establish what will be the source of the funds, as well as assessing the nature of the operations planned.

3. Is it necessary in all cases before opening a bank account to submit additional information and/or documents (in addition to those named above)?

Additional information and/or documents are to be submitted in cases when analysis of information submitted by the client raises additional questions or it is considered that incomplete or erroneous information has been presented. In such case we ask the client to clarify the information provided or to provide additional documents (e.g., statements of accounts with other financial institutions, documents confirming the origin of funds).

4. What does it mean if the bank asks me to answer additional questions or to submit certain documents?

A request for additional information and/or documents is a normal part of opening an account for new customers. We collect customer data because we are required to do so by law and to better understand the purpose and nature of the customer's business relationship. These requirements apply to all existing and new customers.

5. How long may it take for a decision to be made concerning opening of a bank account?

The situation of each client is assessed individually, and the deadline for making a decision depends on the accuracy and detail of the information provided and whether all the necessary documents are provided. We usually make a decision on opening an account within 10 business days from the date of submission of all required documents and information to the bank. In case you have received a request from the bank to provide additional documents or information, the term of 10 working days is calculated from the working day when you submit all the required documents and/or information.

6. What can happen if I don’t answer the bank’s questions or if provide false or erroneous information?

In accordance with the requirements of international and national law, if answers to questions and requested information are not provided, or if incomplete or inaccurate information is provided, the bank may refuse to perform operations, it may terminate transactions or it may refuse to enter into business relations.

7. Can the bank refuse to open a bank account?

Under certain circumstances the bank may refuse to enter into business relations and refuse to open a bank account.

8. What additional requirements are applied to residents who come from countries that the European Commission has determined to be high risk third countries?

Residents who come from countries that the European Commission has determined to be high risk third countries must have an account opened in their name in a credit, payment or electronic money institution which is registered in an EE or EEA country, and they must be able to make first payment from that account. If they do not have such an account and/or they are unable to make such payment, then according to the requirements of international and national law, we will not be able to consider any request from such a customer concerning opening of the bank account. A list of countries that the European Commission has determined to be high risk third countries can be found here.

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.

We ask for this information in order to remove any doubts regarding money laundering, terrorist financing and so on. Quite often, fraudulently obtained funds are transferred to third parties and cash is immediately withdrawn. As a result, we constantly monitor all monetary transactions made through our infrastructure, regardless of the specific amount.

Most of our customers are not involved in any illegal activities and should not have to worry about such inquiries. However, by working with us, they help us to identify real violations more effectively.

In compliance with legal requirements, the bank must know and be certain about the origin of the customer’s funds, thus it requires providing documents supporting the legal origin of funds.

Documents supporting the origin of funds may include movable/immovable property sale contract(s), deed of gift, etc. The bank reserves the right to approach each case individually.

• 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 U.S. Financial Sanctions based on the Swedbank Group Policy on Financial Sanctions.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.

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. 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)

  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 – Sectorial Sanctions. Financial and energy sectors of the Russian Federation are affected by this type of sanctions:
  • Restrictions to provide access to capital markets and restrictions to issue new loans or credits to companies under Sectoral Sanctions (EU and U.S.);
  • Restrictions on certain items used in the oil industry (EU) and restrictions on goods/services for projects that have potential to produce oil in any location (U.S).

  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 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 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.

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.

The list of countries/regions inter alia includes (the provided list is not full as International Sanctions, as well as Swedbank’s internal decisions can be imposed/revoked over the time):

1. Iraq;
2. Myanmar (Burma);
3. Libya;
4. Sudan and South Sudan;
5. Yemen;
6. Somalia;
7. Transnistria region;
8. Lugansk/ Donetsk;
9. 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.

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.