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Monthly issue iFinases published an article by PRIMUS Associates Igors Dambrāns and Kristīna Markeviča on threshold declaration (in context of Law on the Prevention of Money Laundering and Terrorism and Proliferation Financing) – cases, content and procedures for submission.
The article will deal with the subjects, cases and the modalities and content of the submission of the threshold declaration. The threshold declaration is a relatively new instrument in force since the end of 2019, which obliges reporting obligations to the large number of entities. Information is provided to the Financial Intelligence Service (hereinafter as FIS). It is used to carry out strategic analysis as well as the processing and analysis of transactions at the disposal of the FIS whereas the global objective is to combat money laundering and the financing of terrorism and proliferations.
Since 17.December 2019 Law on the Prevention of Money Laundering and Terrorism and Proliferation Financing (hereinafter as the Law) determines the obligation to submit a threshold declaration to the Financial Intelligence Service in the cases specified by the subjects established in the Law. The declaration must be prepared and submitted in accordance with the 27.August 2019 Cabinet regulations No. 407 “Provisions regarding the procedure and content of submission of the threshold declaration” (hereinafter as the Cabinet regulation).
It must therefore be determined from the outset whether the economic or professional operator concerned classifies as one under Article 3.
Although in general, the obligation to provide threshold declarations has been imposed on all entities of the Law, in reality the inventory of reporting cases as defined in paragraph 5 of the Cabinet regulation is consistently relevant for only a few categories of entities. The most common case, which could be current for all entities of the Law, is a client cash transaction of at least EUR 7 000.
Cases where individual entities of the Law have an obligation to submit a threshold declaration to the Financial Intelligence Service:
It is important to remember that the FIS does not have the right to disclose the data of the persons submitting the threshold declaration. Primarily, the information contained in the threshold statements is used for strategic analysis. However, in the cases provided for in the Law, the FIS has an obligation to issue the information at its disposal at the request of operational bodies, investigative bodies or prosecutors in operational or criminal proceedings, as well as at the request of a court in criminal proceedings. The subject of the Law itself is also obliged to register the threshold declaration submitted to the FIS and to ensure that it is made available to the supervisory and control authorities at the latest on the next working day.
The obligation to submit the threshold declaration shall not apply to tax advisers, outsourcing accountants, sworn auditors, commercial companies of sworn auditors, sworn notaries, sworn lawyers and other independent legal service providers in cases where they defend or represent clients in pre-trial criminal proceedings or judicial proceedings or advise on the initiation or avoidance of proceedings (except criminal proceedings). the prevention of money laundering and terrorism and proliferation financing).
Each subject of the Law should complement the policies and procedures of its internal control system with the obligation to provide the Financial Intelligence Service with threshold declarations, describing the procedures and content for submitting them.
It should be noted that both the scope of the law’s subjects and the cases of the submission of doorstep declarations may have been modified by the legislator, and the amendments to the Law and the Cabinet regulation should therefore be followed.