2022-03-08
Bank of Lithuania to further assess financial market participants’ links with Russia
The Bank of Lithuania stands in solidarity with Ukraine and, in view of the imposed sanctions and in order to protect the financial markets of Lithuania and the European Union as a whole, will additionally assess the shareholders and managers of financial market participants with links to Russia, as well as the companies that apply for licenses.
“Our response to Russia’s aggression against Ukraine will be tough. We will not allow Russia to use the services provided by Lithuanian financial institutions or to try to operate through its own companies established in our country. We are implementing complex and wide-ranging measures to this end,” said Simonas Krėpšta, Member of the Board of the Bank of Lithuania.
The Bank of Lithuania limits the influence of Russian businesses on the financial markets of Lithuania and the European Union (EU) as a whole. Currently, the Bank of Lithuania supervises 688 financial market participants. There are no Russian state-owned banks in Lithuania, only one payment institution controlled by Russian citizens and several mixed capital market participants, i.e. those with Russian citizens as stakeholders.
The Bank of Lithuania has already appealed to financial market participants to allocate all necessary resources to properly implement the EU’s sanctions against Russia and to prevent attempts to circumvent the restrictions imposed by the EU.
In addition, the Bank of Lithuania will further assess the shareholders and managers of financial market participants with links to Russia as regards their compliance with the set requirements. The Commission for Coordination of Protection of Objects of Importance to Ensuring National Security has already been approached on this issue. If non-compliance is detected, the Bank of Lithuania will decide on the application of measures provided for in the legislation.
Blocking opportunities to circumvent sanctions. Financial institutions linked to Russia may seek workarounds for their operations. The biggest potential threats are posed by cash and crypto-asset operations. The Bank of Lithuania has already dispatched a reminder to all participants in the Lithuanian financial market about the implementation of the international sanctions, and also urges them to refuse to provide services to crypto-asset-related entities, if it is impossible to ascertain who the beneficiaries are.
The Central Bank of Lithuania recalls the need to strengthen the prevention of money laundering and terrorist financing, to assess transactions with third parties with particular care, and to collect, monitor and update customer information with particular responsibility. The Bank of Lithuania also warns licensed financial market participants that there may be attempts to offer connections to SWIFT-like systems used by Russia. This must not be done and, should such cases occur, they would not be tolerated.
Blocking access to the financial market in Lithuania and the EU as a whole. The Bank of Lithuania is reviewing existing licence applications in the light of the latest international sanctions: the relevant licences will be refused if the Bank of Lithuania detects capital links between financial market participants and Russia, or if there is an intention to provide services to Russian-registered companies and individuals, which would jeopardise the activities of the financial market participant, the stability and soundness of the financial system, or any other public interest. It is also envisaged to approach the Commission for Coordination of Protection of Objects of Importance to Ensuring National Security on this issue.