*home* Financial Crime Investigation Service under The Ministry of the Interior of the Republic of Lithuania

Prevention of money laundering: suspicious operations are on the rise, multimillion fines will be imposed

According to the information available to the Financial Crime Investigation Service (further – FCIS), the amount of suspended suspicious transactions reached 9 million Euros and 6,7 million Euros last year and over the last 9 months this year respectively. Information on the suspicious money transfers is usually provided to the FCIS by credit institutions. The European Union directive that will be transposed into national law next year introduces more stringent sanctions for violations committed by financial institutions.

Law on the Prevention of Money Laundering and Terrorist Financing imposes on financial institutions and other entities the obligation to provide FCIS with information on suspicious monetary operations. Such operations are detected by way of a close monitoring of the client’s activities in order to establish their unusual features.

Sigitas Šileikis, Head of the Money Laundering Prevention Board, says that the number of received reports on suspicious operations accounted for 480 and 373 last year and over the last 9 months this year respectively. The highest number of reports is submitted by commercial banks. Sigitas Šileikis tackled these issues in the seminar “Prevention of Money Laundering and Terrorist Financing: Highlights and Innovations” that was organised by FCIS.

In accordance with the provisions of the Law on the Prevention of Money Laundering and Terrorist Financing, the detection of suspicious monetary operations last year resulted in a suspension of a transfer amounting to 9 million Euros, of which about 5,5 million Euros were subject to temporary limitation of property rights.  Operations exceeding 15 000 Euros in cash are subject to automated analysis, whereas other operations are subject to measuring the level of risk and submission of lists of the highest risk operations.

“The number of reports on suspicious operations has been not reducing. We analyse the received information and refer it to relevant pre-trial investigation units and other institutions, e.g. State Tax Inspectorate, Police and State Security Department. The largest number of enquiries by FCIS regarding suspicious operations was sent to Latvian agencies“, said Sigitas Šileikis.

Anti-money laundering institutions primarily focus on fictitious companies and suspicious monetary operations, monetary operations carried out by foreign companies registered in off-shore jurisdictions and the co-called money mules.

Next year, the EU Directive on the Prevention of Money Laundering and Terrorist Financing will be transposed into national law. The Directive imposes more stringent fines on financial institutions for violations. For example, the maximum fine for a legal person may amount to 5 million Euros or one-tenth of the annual turnover of the undertaking.

Therefore, the seminar also discussed the new Law on the Prevention of Money Laundering and Terrorist Financing that should be considered by Seimas next year for the purpose of transposition of this Directive into national law.

“The Law has been drafted in order to implement the most recent international requirements in the area of fighting against money laundering and terrorist financing. State institutions will be committed to providing assistance by assessing the risks of money laundering and terrorist financing at national level. Responsible authorities are obliged to impose multimillion fines. The implementation of this law will create conditions for a more effective protection of the financial sector against money laundering and more effective protection of the public against terrorism,” – explained Vilius Pečkaitis, Head of the Compliance Division.

The discussion was joined by Stasys Kropas, President of the Association of Lithuanian Banks, who noticed that too much cash has been still used in Lithuania and there is a lack of virtual wallets and control of pre-paid cards.     

Representatives of the Central Bank of the Republic of Lithuania and State Security Department emphasised the need for a larger contribution of the banks in identifying threats and the control of virtual money. They noted that terrorist financing schemes are simple and the amounts dedicated to terrorist acts are not large, therefore, it is getting more and more complicated to indentify these operations.

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