2020-08-03
Bank of Lithuania recommendations – what to pay attention to when evaluating higher risk customers
The Bank of Lithuania urges the country’s banks, credit unions and electronic money and payment institutions to monitor higher risk customers more closely and provides recommendations on where to focus the most attention.
“The coronavirus has adversely affected the economy and it’s a perfect opportunity for criminals that try to defraud people of money. Our aim is to prevent them from taking advantage of financial market participants, therefore we want to draw your attention to the key aspects and responsibilities that market participants have”, says Jekaterina Govina, Director of the Supervision Service of the Bank of Lithuania.
The Bank of Lithuania is assessing the risk that the damage to the economy done by the coronavirus may result in an increase of financial crimes (fraud, cyber-attacks, distribution of counterfeit and pirated goods, creation of fictitious e-shops, establishment of illegal investment platforms, organisation of illegal gambling and other similar activities). Residents, especially those who are financially vulnerable, may be more susceptible to false promises of earning money “quickly and effortlessly” by investing in complex financial instruments (especially in the Forex exchange market), trying their hand at gambling websites, be tempted to buy cheap non-existent goods and thus lose their money.
In order to prevent illegal activities, financial market participants also play an important role, therefore it is essential that they constantly improve and update their knowledge of money laundering and financing of terrorism preventive measures, taking into account relevant changes and trends in the financial market, and recognise money laundering schemes, etc.
Ms Govina reminds financial market participants to constantly monitor their customers’ activities and changes in them as well as to update the information they have, especially of those customers that are attributed to a higher risk group of money laundering and financing of terrorism. Special attention should be paid when the activity that is carried out requires permits (licenses) and customers are unable to provide them as well as when a company operates in one jurisdiction and opens a payment account in another.
Simplified customer due diligence should only be applied when the customer is attributed to a low risk category by the financial market participant after applying the approved procedures. This type of identification should not be applied to financial institutions offering especially risky investment services and to digital currency exchange offices.
If the customer is identified through non face-to-face identification, the Bank of Lithuania recommends to not simply trust automatic identification systems but to also constantly perform additional sample checks.