In-Depth Customer Research Legislative Provisions

Original Language Title: Klientu padziļinātās izpētes normatīvie noteikumi

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Financial and capital market Commission, the provisions of regulations No 125 in Riga august 27, 2008 (pr. Nr. 33. p.)
In-depth customer research, regulations Issued under the provisions of Criminal money laundering and terrorist financing Prevention Act article 7 and the second paragraph of article 22, the fifth part i. General questions 1. "customers in depth research regulations" (hereinafter-the rules) are binding on the institutions, private pension funds, investment companies and investment management firms (all together-financial institution).
2. the rules provide: 2.1. cases in which the financial institution made an in-depth study of the customer;
2.2. the depth of the research agenda and the minimum amount to start a business relationship, as well as business;
2.3. the crime of money laundering and terrorism financing risk categories and their corresponding risk;
2.4. the customer specific in-depth research;
2.5. the client's transaction order extended monitoring.
3. Customer's in-depth research on the amount of information depends on the client's criminal money laundering and terrorism financing risk. Different customers in-depth research results in the amount of information may be different.
4. the authority shall decide on the termination of transactions with the customer, if the 45 days of the date when the customer found the in-depth research prerequisites, can not provide in-depth customer research minimum volume requirements.
II. in-depth Customer research agenda 5. client risk assessment of financial institution uses those rules that risk categories and their corresponding risk characteristics.
6. A financial institution may determine the risk weighted rate and a numeric client evaluation (scoring) system, as well as the use of other standardized decision-making algorithms, it is suitably documenting, if they do not conflict with the requirements of this regulation.
7. Customer's in-depth research consists of: 7.1 initial research carried out by setting up business relationship with the customer or accepting client;
7.2. research conducted by the business.
8. Establish a business relationship with the customer, the financial institution determines the client's initial risk assessment of the following risk categories: 8.1. country risk;
8.2. risks arising from customer's legal form;
8.3. the risk posed by the client in the economic or personal action;
8.4. the risk posed by the client's products or services.
9. the customer is found to match one of these rules the following high risk features, financial institutions carry out the client's original research.
10. Apart from the initial risk assessment or the amount of the transactions carried out by financial institutions carry out in-depth research of the customer if: 10.1. suspect that customer transactions are linked to criminal money laundering or the financing of terrorism;
10.2. the client or its transactions have received information or requests in connection with criminal money laundering, financing of terrorism or criminal offences from korespondējošaj credit institutions;
10.3. the customer or its transactions have received Criminal money laundering prevention Department, the pre-trial investigation authorities, Prosecutor's Office or court request in relation to a suspicion of criminal money laundering, financing of terrorism or any other criminal offence;
10.4. customer transactions or requests have been received in relation to criminal money laundering, financing of terrorism or other criminal offences from the pre-trial investigation authorities, Prosecutor's Office or Court of criminal proceedings.
11. A financial institution provides to the internal control system, which allows you to identify in a timely manner where the customer must be carried out in-depth research.
III. Criminal money laundering and terrorism financing risk categories and their corresponding risk signs 12. Customer's residence (registration) country risk is the risk of a financial institution be ie related to criminal money laundering or terrorism financing, in cooperation with the customer from the country whose economic, social, legal or political circumstances can encourage public use of criminal money laundering or terrorist financing.
13. High risk customer registration (residence) country considered a country or territory: 13.1. included in the Cabinet of Ministers approved low tax and duty free list of countries and territories;
13.2. against which the United Nations or the European Union has identified financial or civil restrictions;
13.3. included in the international financial action task force (Financial Action Task Force) on the list of non-cooperative countries or for which that organization has published a communication as the country or territory that has no laws against criminal money laundering or financing of terrorism or in which they are with significant disabilities and therefore does not meet international requirements. Financial and capital market Commission informs the financial institutions of the following countries and territories.
14. customer risk is the crime of money laundering and terrorist financing risks that have the customer's legal form, the owner of the structure or to the customer's business.
15. the customer has a high criminal money laundering or terrorist financing risk, considered the following: 15.1 the legal person which emits or may emit bearer shares (equity securities);
15.2. a legal person whose owner or participant structure makes it possible to determine the true beneficiary;
15.3. the society, Foundation and similar legal formations that are not profit-oriented character, except when it is granted in the Republic of Latvia the status of public benefit;
15.4. the outsourcing of the accounting officer, lawyer or legal arrangement of formation and activity of the service provider to a financial institution to open an account in the name of their financial transactions on behalf of customers;
15.5. the customer, business or private, in which the transaction is associated with the Republic of Latvia, except when the client enters into business with the Republic of Latvia registered financial institution branch or subsidiary, or parent or subsidiary in a foreign country and the customer's business or private activity is related with the State in whose territory such branch or agency, or a parent or subsidiary company. This provision shall not apply where the customer purchases in Latvia registered investment certificates of the Fund.
16. On the customer's business, which has high crime of money laundering or terrorist financing risk, considered the following activities: organizing gambling, 16.1;
16.2. collection services;
16.3. mediation in transactions with real estate;
16.4. the trade in precious metals and precious stones;
16.5. the trade in arms and ammunition;
16.6. the reinsurance services, except where the service provider is properly licensed and subject to supervision of the service provider or supplier of the international rating agencies provided rating of investment grade;
10.4. the provision of the services (for example, billing, cash, currency exchange, money transfer agents or other service providers that offer money transfer options).
17. Product (service) risk is the risk that financial institutions provide a service or product can be used for criminal money laundering or terrorist financing.
18. the financial institution's products (services), which have the high crime of money laundering or terrorist financing risk, considered as: private services-18.1, individual services provided by wealthy clients – natural persons providing complex client asset management, including advice for financial planning, investment, tax and probate matters, special lending terms, the following specific customer and business service, as well as increased customer information privacy conditions;
18.2. the loans that are secured by the collateral of financial instruments or of a third country credit institution guarantees issued, except when the repo transactions are carried out;
18.3. Trust (the trust) in transaction services, if the trust amount exceeds 200 000 LVL equivalent;
18.4. the release and payment cards service, if one client – natural person presented more than 10 or legal person – at least 20 payment cards or less card, if this card is not linked to the economic activity of the client.
19. For the customer's transactions, which has high crime of money laundering or terrorist financing risk, considered as a transaction that meets the following characteristics: 19.1 the payment received or made significantly exceeds the threshold set by the financial institution on the basis of the client's business/personal action research results;

19.2. the monthly credit turnover exceeds 200 000 LVL equivalent or substantially exceeds the other, smaller, threshold, determined by the financial institution on the basis of the client's business/personal action research results;
19.3. the three months credit turnover exceeds 500 000 LVL equivalent or substantially exceeds the other, smaller, threshold, determined by the financial institution on the basis of the client's business/personal action research results;
19.4. the annual turnover exceeds 2 000 000 credit lats equivalent or substantially exceeds the other, smaller, threshold, determined by the financial institution on the basis of the client's business/personal action research results;
19.5. the first credit transactions in the customer's account is made after six months from the date of the start of a business relationship with the customer, and the monthly credit turnover has reached the equivalent of 50 000 lats;
12.2. the first outgoing payment from the client's account are made in the 12 months after account opening;
19.7 clients – natural persons a cash transaction is for an amount greater than 10 000 LVL equivalent, or monthly cash transaction amount is greater than 50 000 LVL equivalent, or customer – legal person a cash transaction exceeds the limit values which the cash transaction for total financial institution established on the basis of the customer's business activity survey results;
19.8. the client has the society or Foundation and business is carried out in the framework for money transfer to foreign countries, and the amount of transaction exceeds 7 000 LVL equivalent.
20. Customers who comply with this rule 13, 15, 16 or 18. characteristics referred to in paragraph 1, the financial institution determines the client's business or personal transaction the appropriate threshold for cash transactions, documenting these limits and the reasons therefor.
21. in determining whether a customer has exceeded its specified threshold, transactions may not be taken into account: 21.1. client transfers made to other own accounts at the same financial institution;
21.2. the mutual accounts between the financial institution and the customer.
IV. in-depth Customer research minimum, by establishing business relations with the customer Found a client 22. compliance with the provisions of any of the 13, 15, 16 and 18 of those signs, a financial institution: 22.1. get more information about the client's business or personal activity, origin of funds, existing or envisaged cooperation with financial institutions, information about the main business partners of the client, the nature of the business, the planned amount and the place of business or the residence of the client (the client's actual address);
22.2. find out the true beneficiaries of the customer, if the customer is a legal person or if it is known or suspected that the client created the business relationship with the financial institution or the interests of another person;
22.3. the information available to the public, whether the client, the authorized person and the real beneficiary not previously convicted or suspected fraudulent activities, criminal money laundering or such attempts. Found the following information, obtain authorised the Board of directors or the Board with the consent of the members of the Board the establishment of business with this client.
22.4. If you wish to establish a business relationship with the financial institution located in the territory of a State which is not bound to its personal or business, then find out the reasons for such action;
22.5. make sure that the customer's license, special permission or it is registered with the competent authority, if the client operation declared it necessary;
22.6. a customer requests that comply with the legal form of this provision the signs referred to in paragraph 15.1., confirmation that the financial institution will receive information when a client will take the true beneficiaries.
V. minimum requirements of in-depth research carried out during the business of 23. If a client meets any of these rules 13, 15, 16 and 18 of those signs and customer transactions undertaken comply with the 19. characteristics referred to in paragraph 1, the financial institution: 23.1. compare customer account transactions in compliance with the customer's declared business activities;
23.2. get more information to make sure that the client or specified financial institutions ascertain the true beneficiary is really the true beneficiaries of the client;
23.3. find out the customer's existing financial resources;
23.4. analyse the client's business or personal activity.
24. Compared to the customer's account of the transactions of the client's compliance with the declared economic activity, financial institutions shall verify that: 24.1. customer transactions are economically viable and does not significantly exceed the declared amount;
24.2. duties of the customer stated business or personal activities;
24.3. the client's business with a declared and other counterparties do not conflict with the economic activity of the client;
15.2. it is business with major clients of the counterparties of supporting documents.
25. If a financial institution finds that it does not have enough information to verify this rule 24.1.-24.4. above, it requires the client's explanations or the required information and documents.
26. to ensure that the customer or specified financial institutions ascertain the real beneficiary is the real beneficiary of the client, the financial institution shall take one or more of the following: 26.1. get more information about the true beneficiary's assets;
26.2. find out what the actual beneficiaries of the economic or personal activities or obtained in a previous professional experience, education URu.tml., if necessary, to take appropriate economic activities and financial transactions;
26.3. find out whether the true beneficiary and/or other legal persons that it is the real beneficiary, economic or personal activity or are related to financial institutions, the economic activity of the client;
26.4. obtain other information that shows that the person designated as the true beneficiary, controls the customer and benefit from its activities.
27. Analysing the customer's business or personal activity and identifying the origin of the financial resources of the customer, a financial institution: 27.1. update the information on the customer's account credited the origin of funds and business or personal activity targeted information;
27.2. retrieves documents that justify the declared economic or personal activity or the origin of the funds in the account, including the client's explanations and documents relating to transactions or facts that have been based on thorough research;
27.3. verify the eligibility of transactions to the information available on the client's financial position (financial statements) and economic activity. If a financial institution is not available in the client's financial statements, then analyzes the client's larger transactions and verify that they meet the customer's business or personal activity, and is a characteristic of the market existing business activities concerned;
27.4. clarification of other financial institutions, which are the same true beneficiaries. The financial institution documents the one true beneficiary customer group, giving each team member's role in it;
27.5. evaluate the need to meet with clients in its place of business in order to verify the customer's information provided above about the real beneficiaries and economic activities in compliance with the real situation.
Vi. Special in-depth customer research activities 28. finding clients brought this provision 19. characteristics referred to in paragraph 1, the financial institution compared to the customer's account reflect compliance with the declared transaction, as well as, in case of doubt about the financial institutions provided information, verify the customer's information provided above about the true economic beneficiary and or personal activity compliance with the real situation.
29. regular client transactions found to correspond to any of the provisions referred to in paragraph 19, the signs, the financial institution shall verify that these transactions do not give rise to the suspicion of criminal money laundering or the financing of terrorism and ensure that they have up-to-date customer information representative of economic activities.
30. the finding that customer transactions comply with the provisions referred to in paragraph 17.2 characteristic, financial institution evaluates the information about the customer's reasons of late activity and, if necessary, restore the information about future economic activity and business.
31. the finding that customer transactions comply with the provisions referred to in paragraph 19.7, signs of financial authority for cash transactions and about compliance with the customer's business or personal transactions and turnover.
32. the client transaction is found to comply with the provisions referred to in paragraph 19.8 characteristic, financial institution: 32.1. verify compliance with the deal or the Foundation of the society for the purpose of creating and operating direction;
32.2. get more information about what the objectives are the specific transaction;
32.3. obtains information about the Association or Foundation funding sources and major funders.

VII. Requirements for client-non-resident information electronic databases maintenance 33. to improve information on customers – legal entities registered in tax free and low taxation countries or territories, transparency, credit institutions shall establish and maintain an electronic database in which the following records about their customers, registered tax free and low taxation countries or territories: 33.1. name;
33.2. legal address;
33.3. the customer's place of business address;
20.8. economic activity of the client;
33.5. client registration date;
20.9. date of start of business relationship with the client;
20.9. the true beneficiaries of the customer's first name, last name or legal name of the controlling party.
34. a credit institution regularly and timely perform client – non-residents of the electronic databases of information updates.
VIII. Customer transactions extended monitoring arrangements the customer 35. is done in-depth research, business financial institution increased monitoring.
36. the customer transactions increased surveillance applied up to the moment when the financial institution has obtained the customer's in-depth research information needed to make or have made a decision to terminate business relations with the customer.
37. for the purposes of customer transactions increased, for the monitoring of the financial institution may impose such restrictions on the client for the execution of transactions, it is suitably documenting: 37.1. determine that the transaction is completed only with financial institutions or financial institutions higher level officials consent;
37.2. determine client business quantitative limits;
37.3. allow only certain kinds of transactions or payments (for example, tax-URu.tml.);
37.4. only allow transactions to specific countries or with certain partners;
37.5. identify other types of surveillance or restrictions.
38. If a financial institution is deemed necessary, it can save this rule 37. the limits laid down in point also after having obtained a client's in-depth research necessary information.
IX. Closing questions 39. With the entry into force of these provisions force loses financial and capital market Commission Regulation No 93 12.05.2006. "the Crime of money laundering and terrorist financing prevention internal control system development".
40. Financial institution until 31/03/2009 provides all of the necessary measures to implement in full the requirements of these regulations.
Financial and capital market Commission of Krūman I.

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