Overview of AML in Lithuania
A report on money laundering was created in Lithuania in 2016 by the US Department of State's International Narcotics Control Strategy Report (INCSR). According to this report, since Lithuania is not a financial center, it has sufficient legal protection against money laundering. However, due to its geographical location on the border between Russia and Belarus, it has become a target for smuggled goods and tax evasion crimes. Value-added tax (VAT) fraud is one of the biggest sources of illegal income in Lithuania. Here, money laundering activities are often linked to fiscal crime tax evasion, such as the misappropriation of goods with low reporting of value, such as spending money on VAT, illegal capital flight, cigarette smuggling, illegal alcohol sales.
Moreover, there are some basic laws of the Republic of Lithuania on the Prevention of Money Laundering and Financing of Terrorism. For example:
- Transformation or transfer of the property in order to assist the illegal origin of the property or anyone involved in the property.
- The concealment of real property, origin, source, location, rights regarding property, information obtained from a criminal act, or such action of the property in question.
- Obtaining and using the information about the property in question during the acquisition/possession of a crime
As a result of any action referred to in the above articles, these activities are considered as money laundering activity and criminal action is applied.
FATF Status in Lithuania
Lithuania is not on the FATF Country List with strategic AML deficiencies. The last Mutual Evaluation Report for the implementation of money laundering and counter-terrorism financing standards in Lithuania was carried out in 2019. Based on this assessment, Lithuania was considered Compliant for 9 of FATF 40 recommendations and largely compatible for 23. Besides, there are no international sanctions against Lithuania.
AML Regulators in Lithuania
The following institutions are responsible for anti-money laundering and or terrorist financing in Lithuania: Government of the Republic of Lithuania, State Security Agency of the Republic, Lithuanian Financial Crime Investigation Service, Lithuanian Bank, Customs Office, Cultural Heritage Protection Agency affiliated to the Ministry of Culture, Lithuanian Notaries Chamber, Lithuania Judicial Chambers, Lithuanian Chamber of Auditors, Lithuanian Bar Association and Lithuania Analysis Office.
In addition, The Anti-Money Laundering Center of Excellence, established in Lithuania, stated that the public and private sector should combine their efforts to strengthen the framework of anti-money laundering and counter-terrorism financing (AML). Thereupon, on April 6, 2020, the establishment of the AML Center of Excellence was approved by the Government of the Republic of Lithuania. Its founders and stakeholders will be the Bank of Lithuania, the Ministry of Finance of the Republic of Lithuania, and commercial banks operating in the country. Financial Crime Investigation Service, Police Department, State Tax Inspectorate, and Prosecutor's Office are expected to take part in the activities of the center. With the establishment of the AML Center of Excellence, it is aimed to implement the most effective AML practices to reduce money laundering activities in Lithuania.
What Are the Regulated Sectors in Lithuania?
Although Lithuania is not a large financial center, some sectors still appear to be at high risk for money laundering. In Lithuania, they must regulate and monitor high-risk businesses to reduce money laundering risks. In Lithuania, the following sectors are generally considered high risk. AML regulations apply to these sectors. If any of these sectors do not comply with AML regulations, criminal proceedings are initiated.
- Trade-in goods in cash
- Trade-in real estate
- Banking / Transfer of funds Banking / Cash deposits to the current account
- Accountants, auditors, and tax advisors
- Notaries Gambling sector / Casinos / Online gambling
- Currency exchange offices
- Investment companies
- Payment / E-money institutions
- Credit unions Non-profit organizations / Religious organizations
- Crowdfunding platforms
To give a striking example of these sectors, a report prepared for the Gambling sector has also been rated as a maximum of 4 on a scale of 1 to 4 on the scale of casinos, who have been identified with the purpose of laundering property acquired. In Lithuania, the Casino sector is exposed to risk because this sector provides an attractive number of cash flows for organized crime groups, PEPs (Politically Exposed Person), and those who come to money laundering from high-risk countries.
Sanction Scanner Solutions for Lithuania
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