On Monday, March 1, 242 branches of foreign merchants were liquidated. None of them provided information about their true beneficiaries, reports Lursoft’s Client Portfolio.
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Throughout February, a significantly smaller number of branches of foreign merchants were closed than on Monday in one day. Lursoft has investigated that only five branches of foreign companies have been liquidated last month.
Among the branches of foreign companies liquidated on March 1 are the Latvian branch of UAB Headex, the Latvian branch of Velvet Finance UAB, the Latvian branches of Munich Wealth GmbH and other branches from various industries.
It has already been reported that by January 1 of this year, branches and representative offices of foreign merchants registered in Latvia had to disclose their true beneficiaries, otherwise they may be excluded from the register. One month until the day when all branches of foreign companies had to disclose their true beneficiaries, only 10% did so, according to Lursoft.
In early February this year Business Register (UR) with the State Revenue Service (AT), the aid was identified by about 200 active branches and representative offices (ACPs) of foreign operators, as well as representations of foreign organizations (OPs), which have not yet identified the true beneficiaries (PLG) but have identified employees.
The PLG of a foreign legal entity or legal entity that registers a branch or representative office in Latvia had to be disclosed in the period from 1 July 2020 to 1 January 2021. It had been identified by the legislator as the last PLG to be opened, given its small number of less than 1,800 out of a total of more than 200,000 active legal entities, companies and organizations registered in the UR registers, as well as their relatively low money laundering risks analyzed in the National Risk Assessment Report.
The register acknowledged that, unfortunately, the ACFs, the ACPs and the IOPs had revealed their PLGs. By the beginning of this year, less than 24% of branches and representative offices had done so. Therefore, in accordance with the provisions of Paragraphs 47 and 48 of the Transitional Provisions of the Law on the Prevention of Money Laundering and the Financing of Terrorism and Proliferation, the UR has initiated the exclusion of ACFs, ACPs and POPs from the registers.
UR drew attention to the fact that the regulation contained in the Law on the Prevention of Money Laundering and Terrorist and Proliferation Financing and the Commercial Law provides for a relatively long simplified liquidation process with several steps (sending a warning, terminating the activity, and finally removing it from the commercial register). On the other hand, the state-initiated liquidation of branches and representative offices of foreign entities is much faster – according to Paragraphs 47 and 48 of the Transitional Provisions of the Law on Prevention of Money Laundering and Terrorist and Proliferation Financing, it takes place without special warnings or “with one click”.
Taking into account the information in the media at the end of the year that many undisclosed ACs, ACPs and AROs are economically active, including employees, in January the UR requested additional information from the SRS to identify economically active and inactive entities that could be excluded immediately.
Amendments to the Law on the Prevention of Money Laundering and Terrorist and Proliferation Financing were adopted in June 2018.