The Crime Of Money Laundering And Terrorist Financing Prevention Internal Control Systems Development Rules

Original Language Title: Noziedzīgi iegūtu līdzekļu legalizācijas un terorisma finansēšanas novēršanas iekšējās kontroles sistēmas izstrādes noteikumi

Read the untranslated law here: https://www.vestnesis.lv/ta/id/135140

Financial and capital market Commission Regulation No 93, Riga, 12 May 2006 (pr. No 21 p. 2)
The crime of money laundering and terrorist financing prevention internal control system development regulations Issued pursuant to the financial and capital market Commission Act 7 of the first paragraph of article 1 and paragraph 2 of article 17 of the General questions 1. rules shall lay down the requirements for credit institutions, credit unions, investment companies, investment management firms, insurers, Latvian Central Depositary, organizers of the regulated market (stock exchange), private pension funds and insurance intermediaries (hereinafter referred to as the participant) must take into account the developing and documenting an internal control system in order to identify customers and to find out the real beneficiaries, to detect unusual and suspicious financial transactions.
2. The rules are binding for the participant, as far as this provision may be applicable regulation the participant or its functioning.
3. a participant in the development and documentation of these provisions that the policies and procedures to comply with the law "on laundering" (hereinafter referred to as the Act) requirements, reduce the opportunity for participants to interact with customers who may be involved in criminal money laundering or the financing of terrorism, as well as prevent damage associated with rapid loss of confidence.
4. The terms used in the following terms: a client 4.1 risk groups — client breakdown, in which a participant, on the basis of the internal control systems set out in the documents the signs into customers depending on the participant's evaluation of customer risks in relation to criminal money laundering or the financing of terrorism;
4.2. high risk customers: customers who own or transactions carried out are signs that may indicate an increased risk for the possible use of criminal money laundering or terrorist financing, and the following features are defined in the internal control system of the participant documents;
4.3. politically exposed foreign person, a natural person who is the head of State, head of Government, Minister, President of the Supreme Court, the President of the Constitutional Court, Member of Parliament, their family members (spouse, parents, brothers, sisters and children), as well as the people who left these positions during the year, and their family members;
4.4. the interrelated group of customers: two or more persons who constitute the participant one single risk because one of them directly or indirectly controls another person or other persons, except persons directly or indirectly controlled by another person or another person, is of Latvian National and local authorities, the Member States of the European Union, the Organisation for economic cooperation and development and the European economic area Member States of the European Union and European economic area countries authorities;
4.5. internal control system (within the meaning of these regulations): a participant's policies and procedures the criminal money-laundering and terrorist financing in the field of prevention, as well as their evaluation and follow-up mechanisms in order to ensure the functioning of the participant to the participant's management should have reasonable assurance that the participant is secured against the risk of being involved in criminal money laundering and terrorist financing operations, operational risks are continuously monitored and evaluated operations (transactions), in accordance with established procedure, of the participant the participant works reasonably, prudently and effectively, in full respect of the laws and other legislative requirements;
4.6. the offshore-registered trader: a trader registered in a low tax country free and the country, which is defined as such by the Republic of Latvia Cabinet of Ministers Regulations No 276 26.06.2001. "rules for tax free and low taxation countries or territories" or replacement legislation.
 
 
2. Internal control the key elements of the system 5. Member of the internal control framework documents (policies and procedures), contain the following key elements: 5.1. determination of the potential customer base;
5.2. customer identification and clarification of the real beneficiaries;
5.3. the unusual and suspicious transactions detected;
5.4. high risk clients;
5.5. permanent monitoring of customer transactions, the amount and frequency of which depends on the respective customer groups;
5.6. to refrain from suspicious transactions.
6. a member of the internal control framework documents define the order in which it begins and ends with the business relationship between tidbits (agent), on behalf of the participants take the customer's identification and the true beneficiaries of the clearance of accounts, which is certainly the mutual obligations, responsibilities, and requirements are the following among the tidbits (agent), t.sk. impeccable reputation, stable financial position.
7. the rules referred to in point 6 between little (agent) employees who perform customer identification and the true beneficiary of the participant, identified in accordance with the requirements of the law for customer identification.
8. the rules referred to in point 6 between little (agent) your use of the service shall not relieve the Member from liability for client identification, the true beneficiaries of the clearance of accounts and control of economic activities.
9. a member of the internal control framework documents define the procedures governing the related documents to the customer.
 
 
2.1. determination of the potential customer base of 10. a member of the internal control framework documents determines your potential customer base and show signs that characterize the customers with whom the participant does not cooperate.
11. in determining the potential customer base, members shall take into account the client's reputation, customer registration (residence), the customer's operating direction (transactions), as well as the information and documents on these transactions.
12. a member of the internal control framework documents define the minimum criteria (procedures) the suspension of cooperation with the client.
 
 
2.2. the identification of the customer and find the real beneficiary 13. a member of the internal control framework documents define the customer identification and the true beneficiaries of the clearance procedures.
14. before the start of the cooperation with the customer from the customer request the participants information about its planned transactions, the nature and extent to which it intends to carry on with the players.
15. a participant in its internal normative documents (procedures) determines the true beneficiaries of the clearance procedure, including targeted, proportionate and appropriate measures to allow the participant to gain the confidence that it has sufficient information about the true beneficiary, its personal or business operations and financial resources.
16. paragraph 15 of the rules for enforcement of the Member (t.sk., requiring the customer to the following documents) can be used: 16.1. inquiries or statements from real estate or other property registers (land register, the road traffic safety Directorate register of vessels, URu.tml);
16.2. the cognitive or extracts from public registers on the true beneficiary owned shares or capital;
16.3. the information provided by the account holder for the true beneficiary owned financial funds;
16.4. certificates or other types of information about the true beneficiary jobs, positions, jobs, occupation, profession, education URu.tml.;
16.5. the true beneficiary of income (tax) Declaration or other documentary information about the true beneficiary income and their acquisition (salary, dividends, income from the company concluded contracts (business), inheritance, donations, income from property disposals URu.tml.);
10.3. other documents or information indicating that the true beneficiaries of the economic situation.
17. Natural persons-non-residents, who arrived at the Latvia, identification of participants can only be used for the entry of Latvia valid personal identity card.
18. the participant can rely on other companies in the Group of the national competent authority to supervise financial institutions established in a Member State of the European Union, a foreign country, which is the Organization for economic cooperation and development or the Member of the financial action task force to combat money laundering (the FATF) Member States, the identification of the customer, the actual beneficiaries of the clearance of accounts and customer transactions of economic or personal knowledge, if such steps are documented participants.
19. If the participant performs rule 18 such activities, it is responsible for the compliance with the legal requirements of the customer's ID, find the real beneficiary and the customer's personal economic or operational management.
20. The credit institution's internal control framework documents define the criteria of a foreign credit institution, with which it does not start.

21. a member of the internal control framework documents define the procedures of foreign credit institutions, which opened an account at the Member's, the internal control system of the criminal money-laundering and terrorist financing prevention to assess the effectiveness and adequacy of the procedures, as well as account permanent monitoring of transactions.
22. Where a participant in the circle of potential customers has planned cooperation with economic operators registered in the offshore or by merchants whose registration (residence) of legislation essentially gives the merchant the right to perform economic activities like offshore registered economic operator, a member of the internal control system documents shall make arrangements that allow you to get enough information about this merchant account objectives and financial means.
23. Rule 22 requirements of the participant can use: 23.1. documented information about the operator's existing economic activities;
23.2. documented information on the start-up of the merchant or its true economic beneficiary or personal activity, as well as its business partners;
23.3. schematic's cooperation with business partners display;
23.4. other sufficient and credible information that the participant in accordance with the procedure for acquiring origin of financial resources.
24. a member shall not be entitled to start to provide financial services to the client before the client has been identified and the real beneficiary is established in accordance with the law.
25. to provide financial services to the client, business relationship with a participant establishes remotely using any electronic means of communication or postal service, members can trust the public notary's client identification. In this case, the notary public certifies the customer wants to start a business relationship with the members and the person's identity card valid for a copy of the document.
26. the client or potential client identification and the true beneficiaries of the clearance of accounts in foreign countries are eligible to take the Member's staff member's representative, who shall be entitled to operate in the foreign country in accordance with its laws and regulations, the employee or the mediator (agents).
27. a member of the internal control framework documents the additional steps it will take to ensure that participant identification data and submitted information on the true beneficiaries of the authenticity of the client which business relationship formed with members of the remotely-personally not arrival at participants, as well as documented in this extra step.
28. The provisions of paragraph 27 of the requirements a member can request a client: 28.1. personal presence, performing the first transaction;
28.2. to perform client addresses and phone number verification, sending documents to the customer at its specified address with licensed courier service or go face-to-face visits, interactions with the customer on the specified telephone number or otherwise verifying the information provided;
17.6. to check if the customer or the real beneficiary is not included in the lists of undesirable customers, using internationally accepted and verifiable procedure defined in the participants information sources on the internet or in public and commercial databases;
28.4. past member with the client does not terminate the business relationship;
28.5. check the customer or the true beneficiary's internet home page and email address by searching the internet catalogues;
28.6. using different from 28.1.-28.5. referred to different additional steps that the participant determines the internal control system which ensures that these provisions in the additional transactions equivalent to the data and information.
29. the statement in the form of the true beneficiaries of the credit institution, an investment brokerage company and investment management company client requires at least the following: 29.1. statutory customer identification data;
29.2. client proof that notice of the true beneficiaries of the specified person is the real beneficiary of the client;
29.3. the customer undertakes to immediately inform the Member in writing of any changes in the information provided above concerning the financial resources of the true beneficiaries.
 
 
2.3. the unusual and suspicious transactions detected 30. define and document the participant is unusual or suspicious financial transaction detection procedures.
31. a member shall determine the suspicious transactions, assessing the risk of symptoms arising from its customer structure and their economic activities.
32. a member of the internal control framework documents define the procedures governing the conduct of staff members, finding that the customer conducts a transaction that is not a typical client business or personal transaction or suspect of criminal money laundering or the financing of terrorism.
33. That credit institutions, credit unions, investment companies, investment management firms, Latvian central depository, the organizer of the regulated market and pension fund client transaction is suspicious, may indicate the following: 33.1. transaction is clearly illegal;
33.2. the client's economic activities of the atypical nature of the transaction or the amount and an explanation for the customer or transaction causes a reasonable doubt;
33.3. the transaction is not associated with the client's business or personal activity;
33.4. the customer places a large number of small identical deal that gives grounds to suspect of such a transaction, which according to the law comply with the unusual characteristics of the transaction;
33.5. transaction is linked to another deal, for which a credit institution, a Credit Union, an investment brokerage firm, investment management company, the Latvian Central Depositary, organizer of the regulated market or the pension fund already has reported Criminal money laundering prevention service (hereinafter referred to as the control service);
20.9. the client's business activities to the turnover of the financial changes and client notes raise serious doubts;
20.9. money in the account opened at a personal, rather than business activities often deposit a person other than the client, the client's family member (spouse, parents, brothers, sisters and children), the real beneficiary or trustee of the client, and the client's explanations causing reasonable doubt;
21.0 customer is the business. operation disproportionate account or payment card;
21.1. the customer shall provide money signs with its economic or personal activity typical of a nominal or packaging;
33.10. other economic or personal customer transaction atypical symptoms.
34. the fact that the insurer and insurance intermediary client transaction is suspicious, may show the following signs: 34.1. There is no insured risk;
21.3. There is no insurable interest;
21.3. the client wants the insurance specified in the contract, the place of conclusion of the contract to be different from the actual conclusion of the contract of insurance;
21.4. unjustified third-party involvement in transactions t.sk. insurance costs with customer clearly unrelated to any third party or the third party that is specified in the insurance contract;
34.5. the client wants to include provisions in the contract of insurance the insurance payments or costs that are not the typical client business and personal activity, or is erratic, confusing third party funds of insurance contributions;
21.5. regular termination of the insurance contract before the deadline;
21.6. the customer is not a typical or a vague account of credit or change of credit insurance transactions;
21.6. the customer transactions that do not contribute to the insurer access to sufficient and true information about the customer's contractual obligations to t.sk. esoteric (difficult) or checking the expensive information;
21.7. the insurer's normal everyday practice or client does not explain the use of the cash to insurance transactions;
34.10. erratic or ambiguous use of insurance intermediaries in transactions (or atypical high insurance premiums or pay high insurance intermediaries, atypical sales rise URu.tml.);
34.11. regular insurance and overcharge customers requirement to reimburse payments made in error;
34.12. insurer client transactions finds other signs that it considers the transaction atypical or obscured.
 
 
2.4. High risk client discovery 35. a member of the internal control framework documents define the high risk customer signs.
36. High risk customers considered customers, having any of the following signs: 36.1. client registration (residence) country is included in any internationally recognized country, related to criminal money laundering or the financing of terrorism, the list;
36.2. client registration (residence) country is included in the FATF list of non-cooperative countries;
36.3. the customer shall at regular intervals carry out unusual or suspicious financial transactions, on which the Member reports for inspection services;
36.4. the customer does not justify trying to reduce participant provided the true beneficiary information needed for clarification (news on the economic or personal activity, for transactions);

22.7. the customer received requests from participants in criminal proceedings or in court, possibly indicating their relationship to criminal money laundering or the financing of terrorism;
22.7. the customer is the company that owns the real beneficiaries most bearer, except when a member is known and documented according to the client's goal and the economic activity and the client the real beneficiary is not a high risk customer;
22.8. the client is a person, for which the Member is not available in the financial statements, if such reporting is mandatory, in accordance with the registration (residence) national laws and regulations;
22.9. new client (for a period of up to three months), which is registered offshore merchant or its registration (residence) of legislation essentially gives the merchant the right to perform economic activities like offshore registered economic operator and the actual monthly turnover exceeds 200 000 LVL or an equivalent in other currency;
22.9. client operation is significantly different from the information provided above for members and customers are not informed the participants about the reasons for these differences;
36.10. client is a politically exposed person.
37. a member of the internal control framework documents are entitled to lay down additional criteria to paragraph 35 are eligible, subject to the customer risk groups, as well as the relevance and importance of the customer in the participant's total customer base.
38. a member of the internal control framework documents define the methods with which it detects if the customer is a politically exposed person. Members can rely on the customer's own the information that the customer is a politically exposed person.
39. the Member determines the customer acceptance process before the start of business to the client according to the client's risk group. Cooperation with high-risk customers player starts after in-depth research process.
40. a member of the internal control framework documents define the recurrence, in which the participants information about the high risk of economic or personal customer activity.
41. it is the responsibility of the Participants to find out the high risk client (legal person) the organisational structure.
42. a member of the internal control framework documents define the high risk customer visits and the need for documentation of visits. Determining the necessity and regularity of visits, a member may take account of the significance and importance of the customer in the participant's total customer base.
43. a member of the internal control framework documents define the order in which it makes sure that the information about high risk client funding source reliability and sufficiency. The participant determines the criteria according to which it will make sure that the information provided on high risk customers (t.sk. of politically exposed persons) whose accounts are used for personal activities, personal investments or financial resources, is reliable and sufficient.
 
 
2.5. Customer transactions continued surveillance 44. a member of the internal control framework documents define the customer accounts transactions and periodic monitoring. The application of the arrangements, a member may take account of client groups of the materiality and relevance, the client in the participant's total customer base.
45. a member of the internal control framework documents define the procedures for high risk clients, as well as the related customer groups or personal actions documentation.
46. The minimum obligation of the participant in relation to high risk clients, for which the Member is available in the annual report with the sworn auditor or certified auditor commercial companies report (opinion), is periodically compare the account transactions effected with the annual report of the data supplied. For high risk clients, for which the Member is not available, a member of the annual report analyzes customer account apjomīgāko transactions taken to supporting or explanatory documents or other documented information and make sure that the client's transactions undertaken comply with the client's business or personal transaction and its about and not any suspected criminal money laundering or the financing of terrorism.
47. a member shall determine the order in which it opens an account, execution (and check) customer transactions and transaction monitoring for the customer with a registration (residence) country is included in the FATF list of non-cooperative countries, as well as the United Nations or European Union economic sanctions the country lists, or the client is from the country of the Organisation for economic cooperation and development is recognized as a "tax haven abuse".
48. participants will be able To constantly monitor customer transactions, management members shall ensure that: a participant's information system 48.1. allows you to analyze and monitor customer accounts and customer transactions made;
Member employees, 48.2. responsible for customer service, or cooperation with the customer, familiar with the customer's business and personal activities, and draws attention to the transactions, which are not typical of customer;
48.3. the internal control system documents is defined in the order in which you perform the foreign credit institution, which opened an account with a member, permanent monitoring and set out the criteria according to which the member requires additional information to a financial institution for its foreign clients and transactions;
30.1. the internal control system documents provides an unusual or suspicious financial transaction reporting procedures for detection and control Department on detected unusual or suspicious financial transactions.
49. a member of the internal control framework documents define the order in which are recorded and stored information on internal staff members reports on suspicious financial transactions, in which the Member is not determined to be suspicious and for which the Member is not reported and the arrangements for control service is not a reason for reporting documentation.
 
 
2.6. To refrain from suspicious transactions 50. a member of the internal control framework documents define the order in which it shall refrain from conducting a transaction if a customer or transaction in question leads to the suspicion of criminal money laundering, money laundering or terrorist financing attempts.
51. a member of the internal control framework documents define the decision on abstinence from a suspicious transaction, making and documenting procedures.
 
 
3. Internal control system monitoring and continuous improvement Council Members and 52. the Management Board shall ensure that the participant is to a specific member's customer base a risk assessment based on the policies and procedures of criminal money laundering and terrorist financing in the field of prevention and they are effectively applied in their daily work. The participant shall ensure that the policies and procedures are explained in the Member's employees so that they can be identified in time suspicious financial transactions and would report to the employee or Department responsible for compliance with the requirements of the law. Employee or Department responsible for compliance with the legal requirements and contacts with control service, should be empowered to become familiar with all participants held customer information, so the true beneficiary and the customer's business and personal activity.
53. a member of the internal control framework documents that the internal audit service checks (control) jāie kļauj also in the plan policies and procedures governing the crime of money laundering and terrorist financing prevention, compliance, regulatory framework for the evaluation and implementation of these policies and procedures. Internal audit (control) Department, a check, pay attention, and to assess the adequacy of the resources of all kinds that policies and procedures for effective implementation. Finding that a member of the Executive Body, insufficient attention to these policies and procedures, and that the participants in the annual budget is not enough resources are provided for this policy and procedure for review and compliance, internal audit (control) of the service promptly reported to the members of the Council, which shall immediately take the necessary measures to remedy the deficiencies found.
54. The participant shall ensure continuous training and improvement of professional skills. The participant shall ensure that new employees understand the law and other legislation governing the crime of money laundering and terrorist financing prevention requirements, objectives and rationale.
55. a member shall document employee training programs, internal control system in accordance with the procedure laid down in the documents through employee training records (registration), as well as maintaining training materials.
 
 
4. final question 56. With the entry into force of these regulations shall lapse with the financial and capital market Commission Council 01.10.2004. decision No. 214 approved the "Crime of money laundering and terrorist financing prevention internal control system design recommendations".
Financial and capital market Commission Vice Chairman j. Brazovsk a