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Bill on shell companies upheld for first reading in Latvian parliament
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    Bill on shell companies upheld for first reading in Latvian parliament

    RIGA, April 17 (LETA) - The Latvian parliamentary committee on defense, interior affairs and corruption prevention today upheld for the first reading in the parliament the bill about restrictions on financial operations by high-risk customers in the Latvian finance sector.

    The majority of the committee members also upheld the suggestion to review the bill as urgent. It is planned that the first reading in the parliament will be held this week, the proposals for the second reading will be accepted until April 23 and the final reading will take place on April 26.

    As reported, the Cabinet of Ministers on April 10 upheld the draft amendments to the Law on Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) aimed at strengthening the Latvian finance system by reducing the number of risky transactions with high-risk customers that meet the definition of a shell company. The bill is also intended to increase the exchange of information between the financial institutions and the law enforcement agencies.

    It has been proposed banning the Latvian financial institutions from cooperation with the entities that show the signs of being a shell company. Under the draft law, the shell company is defined as an entity that fits one or several of the following three criteria. Firstly, there is no actual economic activity and no documentary proof to the contrary. Secondly, the entity is registered in a jurisdiction where companies are not required to submit to the authorities their financial statements. Thirdly, the entity has no place of business in its country of domicile.

    In opinion of the Finance Ministry, the first two criteria are decisive in determining the AML/CFT risks related to shell companies. Therefore the ministry proposes that the ban to do business with shell companies would apply to the entities that meet both those of criteria at once.

    • Published: 17.04.2018 12:06
    • LETA
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