Information for the mass media
Currently the Cabinet of Ministers has approved the Amendments to the Law On the Prevention of Money Laundering and Terrorism Financing, which promotes broader availability of the data base than it is now. The draft law is now forwarded for the debate to the Saeima. However, it was established during the research performed by the ACLB that Latvia has a possibility to open the beneficial ownership register for public even more broadly than the draft law proposes.
Sanda Liepiņa, the Chairman of the Board of the ACLB, emphasizes that, upon making the information in the beneficial ownership register publicly available, its clarification in Latvia might be made even more effective. That would enable the Latvian banking sector to strengthen compliance function for prevention of money laundering and terrorism financing, where banks are constantly making improvements in their control mechanisms. Besides, the publicly available register would indicate on the positive assessment of the legal and economic environment of the country, by significantly improving credibility to business counterparts from Latvia and the reputation of the country, as well as reducing the shadow economy.
Provision of adequate, correct and updated information in the register, as well as public availability was one of the topics on the discussion held today, on 19 June, between the representatives of the public authorities and financial industry and the deputy of the European Parliament Krišjānis Kariņš, who has promoted the initiative to establish the EU-wide register of beneficial ownership.
During the discussion, it was mentioned that few EU Member States have already performed measures or notified on their intentions to make the information from the beneficial ownership register available to public. Introduction of public register is planned in Slovenia, Estonia, Finland, Netherlands and other countries. Also, in Great Britain the information from the beneficial ownership register is available to the general public. Such a position of countries complies with the new European Directive in the field of anti-money laundering or draft AML V Directive. In each of the countries there are different mechanisms for risk elimination of personal data processing in relation to transparency of the beneficial ownership register. “That is an issue to be solved,” considers S. Liepiņa.
The currently existing practice in Latvia is that the threshold specified in the Commercial Law - 25% - permits to establish several undertakings, distributing the proportion of shares. The Enterprise Register currently does not have any duty to assess the existence of coordinated activities between the capital shares distributed in an artificial way, in order to escape from disclosure of beneficial owner. The more active role of the Enterprise Register in prevention of money laundering would be reasonable and has to be provided by regulatory enactments, as well as sanctions for failure to perform the duties should be susceptible and motivating. Besides, currently no law imposes a duty for companies to perform investigation by themselves and collect information on shareholders of their shareholders, as well as other issues are to be observed.
The research conducted by the ALCB shows that public availability to the register would also ensure that not only competent authorities and subjects of the law, but also any person would be able to find out information about legal persons, who have failed to specify or have incorrectly specified their beneficial owner. Failure to specify the fact of the beneficial owner could later be used for legal relations with the state, restricting access to certain type of rights in relation to access to state resources.
“When making information publicly available and open, in addition to the control implemented by the state administration authorities, the included information would also be controlled by other merchants, as well as public. It would be possible to ensure that erroneously specified information on the beneficial owner could be identified in a faster and more efficient manner rather than by using time consuming procedures. That would provide better possibilities also for work of investigative journalists in order to highlight the potential violations. Establishment of a beneficial owner is not only the issue of control services or banks any more, it is our daily life, which should be reflected by regulatory enactments,” considers S.Liepiņa.