Due to the bank’s requirements, the company is considering withdrawing from Lithuania: after blocking the account, it cannot pay the wages.

Ričardas Novošinskas, founder and CEO of Lithuanian company SailRacer, said that due to the bank’s strict requirements, he is forced to consider leaving the company.

SailRacer is dedicated to the production of software and electronics for sailing competitions, the company’s application has around 20 thousand. Users from all over the world, has won several prestigious nominations for innovation during its 8 years of operation. According to the head of the company, the company receives all the revenue from Google, Apple, Amazon and Paypal.

“Swedbank blocked the company’s account under the guise of the strong” Know your customer “principle.
From now on, we cannot settle accounts with suppliers, pay taxes and wages; we are forced to look for alternatives to remove businesses from Lithuania ”, says R. Novošinskas.

According to him, the main problem is a shareholder of the company “Brakoz” B.V., which controls 40 percent. the shares are not registered in Lithuania but in the Netherlands. It also claims to have two shareholders in the Netherlands, legal persons whose shareholders are already natural persons.

The story with the bank continues for a good half year. As part of Swedbank’s anti-money laundering program, the companies requested all documents related to all of the company’s shareholders.

The businessman submitted a series of documents: an excerpt from the UAB SailRacer Shareholders’ Record Center, the company’s founding documents, a beneficiary plan for natural persons, an excerpt from the Dutch Records Center at Brakoz B.V. The latter was rejected by the bank because the apostles were over a year old; the document was issued at the time of company registration.

“We have submitted a new excerpt from the Dutch Records Center on Brakoz BV, as well as statements by its shareholders, but this was not appropriate because the documents submitted” do not reflect the proportion of shares. “Asked by Brakoz BV documents reflecting the shares .

Introducing Brakoz B.V. the statutes, which reflect the proportions of the shares, but that document was also inappropriate, because it is not notarized, without an apostille and has not been translated into Lithuanian and, for some reason, into Russian, ”continues R. Novošinskas.

Subsequently, a coronavirus pandemic broke out, and the shareholders allegedly did not respond to the letters, so SailRacer cannot obtain notarized incorporation documents. The businessman asked the bank to extend the period until the end of the quarantine in Lithuania and the Netherlands, but Swedbank immediately blocked the account.

“We understand that Swedbank is not a Lithuanian capital company and is not interested in GDP growth in Lithuania. We also understand that we are not a profitable customer for the bank: we have no loans, we receive only a few incoming and outgoing orders for month.

I do not know if due to the strict law or Swedbank’s excessive zeal, we are forced to suspend our operations in Lithuania or reconfigure the accounts of Google, Apple, Amazon and Paypal, no matter how honestly we have done it. The head of the company does not hide the outrage.

The man also added that Brakoz B.V. It has a controlling interest in another Lithuanian company, so it had doubts about why the bank does not request documents from this company.

“And if she asks and provides everything, why can’t that information be used? After all, the objective of all this is to prevent corruption, money laundering and terrorism,” asks the businessman.

Swedbank: Account lockout is a last resort

Swedbank did not provide any specific response to the company in question, as the information on clients ‘bank accounts is bank secrecy, so no comments can be made without the clients’ consent.

The bank did not provide information on the total number of customer accounts blocked during the implementation of anti-money laundering measures, since it does not have the possibility to do so. Swedbank spokesman Saulius Abraškevičius points out that blocking a customer’s account is the last resort.

“In all cases, we inform clients about the deadlines to send documents and the possible blocking of accounts if the required documents are not sent. The client can receive up to half a year to provide the necessary information and, according to the bank, deadlines can be reviewed, and the client is also notified in advance about the blocking of accounts, “he explains.

According to him, the bank’s communication on customer awareness says that customers who have difficulty filing documents during quarantine should inform the bank about this and agree on longer terms to send documents individually to the bank.

S. Abraškevičius notes that Swedbank’s general terms and conditions of customer service and provision of services, which are an integral part of all agreements concluded between the bank and the customer, state that if the documents submitted to the bank are in a foreign language, the bank has the right to require that they be translated into Lithuanian.

“The translation of documents into Lithuanian must be certified by a competent translator or a notary acceptable to the bank. Depending on the circumstances, the bank also accepts translations into English or Russian at the request of the client, ”says a representative from Swedbank.

He notes that documents issued abroad are valid in Lithuania only if they are legalized or the signature of the official who certified them is confirmed by an Apostille in accordance with the 1961 Law. October 5 The Hague Convention on the Abolition of the Legalization of Documents Issued in Foreign States, unless international agreements between Lithuania and the respective foreign state provide otherwise

This legal requirement is also provided in the general terms and conditions of Swedbank’s customer service and provision of services.

Bank of Lithuania: the situation exposes another problem

Jekaterina Govina, Director of the Supervision Department of the Bank of Lithuania (LAC), declares that she understands the dissatisfaction of commercial representatives, especially those with long-term relationships with specific banks, with requests for additional information and, if not provided, restrictions or bank account closings.

“At the same time, we understand the steps of financial market participants to strengthen their customer recognition programs. Information is collected not unnecessarily and without reason: both the investigation and the inspections carried out by the Bank of Lithuania and the performance audits Commissioned by financial market participants reveal deficiencies in some institutions in identifying their clients, ”she says.

According to her, the current situation exposes another problem: the access of financial market participants to various public bases, especially those located outside Lithuania, is limited. As a result, this information is requested from customers, as there is simply no other way to obtain it.

“Here it is very important to find the right balance between the need for information and the interests and expectations of customers.
Requiring financial institutions to know their clients adequately is an integral part of the European Union, an integral part of the fight against money laundering and terrorist financing.

In Lithuania, the requirement to know your client is enshrined in the Law on Prevention of Money Laundering and Financing of Terrorism. Financial market participants must identify the customer and the beneficiary, obtain information on the purpose and nature of the business relationship, constantly monitor the customer’s business relationship, observe unusual changes, properly assess risks, etc. t.

To ensure that the documents, data or information provided during client and beneficiary identification are relevant and up-to-date, financial institutions should review and update them periodically. The revision and updating of the information can be carried out in various ways, taking into account the risks posed by the client and the main objective of the law: to avoid the legalization of illegally acquired goods, ”explains the head of the LB Supervision Service. .

Therefore, LAC encourages its clients to cooperate with its financial service providers. If the bank does not receive the necessary information, it can suspend the provision of customer services or terminate the cooperation entirely. However, as he points out, financial service providers must not abuse this right: they must manage risk, not shake it up.

“Financial market participants should take into account the information available about the client and the need to update this information, analyze the client’s money laundering risks and follow the principles of proportionality and prudence,” says Govina.

It ensures that LAC receives inquiries about the bank’s actions and responsibilities related to the application of the money laundering and terrorist financing provisions in practice. These include the SailRacer request, but did not comment further on the case.

“The Bank of Lithuania has taken all available measures to allow banks to contribute to the economic stimulus: it has reduced certain capital, reserve and supervisory requirements. However, there are requirements that cannot be relaxed, including the prevention of money laundering and the financing of terrorism. For their part, the banks did not pay dividends during the previous year, which, by strengthening their capital, postponed the fulfillment of credit obligations to individuals and companies for some time, “comments the ALC representative on supervision applied by banks to Lithuanian companies during difficult times.