Bank of Lithuania encourages objective and individual risk assessment of non-profit organisations
The Bank of Lithuania addressed Lithuania’s financial market participants, urging them to identify and assess money laundering and terrorist financing (ML/TF) risks of non-profit organisations individually to avoid their automatic attribution to higher-risk customers.
“Non-profit organisations are often subject to closer attention of financial market participants. We are receiving certain indications that development cooperation and democracy support organisations working with the Eastern neighbourhood countries encounter difficulties in opening accounts and making payments necessary for their daily activities. We would like to note that AML/CTF measures applied by financial institutions should be adequate for the risk posed by such entities, thus we encourage institutions to avoid the one-size-fits-all principle and consider each case individually,” said Jekaterina Govina, Director of the Financial Market Supervision Service of the Bank of Lithuania.
When identifying and assessing ML/TF risks posed by non-profit organisations, financial institutions should follow the risk-based approach, considering those risk factors that are related to a specific organisation and taking into account the nature and objectives of their activities as well as other important aspects.
It is especially important to ensure that non-profit organisations operating in the field of development cooperation, democracy support, expansion of the security and stability area as well as sustainable development in the EU countries can engage in their activities in Lithuania and use the services provided by the country’s financial system.
In order to identify whether non-profit organisations pose higher risk, financial institutions should assess, for example, whether they do not support jurisdictions associated with higher ML/TF risks, whether their activities are not linked to extremism or terrorist support, whether they are not related to high-value transfers to jurisdictions associated with high-risk third countries, and consider other important information.
In the Bank of Lithuania’s opinion, financial market participants, same as in other cases, should not establish or should terminate business relationships with non-profit organisations only when they are unable to manage ML/TF risks posed by these organisations.