A fine of €244 thousand imposed on a company for AML breaches
UAB Pervesk was imposed a fine of €244 thousand for the inadequate risk assessment of customers by the company and the violation of the Republic of Lithuania Law on the Prevention of Money Laundering and Terrorist Financing. The fine was set in the settlement agreement between the Bank of Lithuania and UAB Pervesk approved by the Supreme Administrative Court of Lithuania.
In April-May this year, specialists of the Bank of Lithuania Supervision Service carried out an unplanned inspection of UAB Pervesk assessing its compliance with the requirements stipulated in the Law on the Prevention of Money Laundering and Terrorist Financing as well as other prudential requirements. Representatives of the Financial Crime Investigation Service took part in the inspection.
The inspection revealed that the company was negligent in the assessment of customer risk: it had no proper internal policies and procedures in place for the effective risk management adequate to its activities, the know-your-customer information gathered in most cases was incomplete and did not reveal the purpose and intended nature of the customer’s operations, and ultimate beneficiaries were not established at all times. The company would not completely ascertain the source of property and funds of customers most of which carried out transactions with virtual assets, while its internal investigations in many cases were formal and not thoroughly performed.
After reviewing the know-your-customer information of selected customers and an analysis of their payment transactions, the specialists of the Supervision Service identified that part of the company’s customers had concluded complex or extraordinarily large transactions without a clear purpose and a clear origin of funds. However, UAB Pervesk not always required to specify the grounds for payment transactions, did not terminate the business relationships with customers when it did not receive required information from them or from their intermediaries.
Customer risk must be assessed based on a number of criteria (e.g. taking into account the risk of geographical region, services and products, considering a legal person’s equity and management structure, volumes of transactions and turnovers, etc.), whereas UAB Pervesk would mostly assign customers to a group of risk which was not adequate to the risk they posed. In identifying and verifying a customer and a beneficiary, the company did not at all times collect all information and documents necessary to identify them; major deficiencies were also established in identifying customers remotely and in the transaction monitoring process and procedures.
The Board of the Bank of Lithuania imposed this fine under the Law on Money Laundering and Terrorist Financing which came into force as of mid-July 2017. It provides up to 10% of total annual income or up to €5.1 million fine for a company for violations in this field.
In addition to the fine imposed, the company has been temporarily prohibited from the provision of services to high-risk customers; it was also obligated to, within ten days, prepare and submit to the Bank of Lithuania a plan for remedying the violations and operating deficiencies identified during the inspection. UAB Pervesk will have to eliminate all of them by the end of this year. The company was imposed a warning for other violations of prudential requirements.