Banks in Latvia are usually used when using non-resident companies. Why Latvia in particular? How were the accounts opened before 2016 and what has changed since than?
Latvia is considered to be a young Switzerland. Most of the bank is oriented to the market of post-Soviet countries there. At the same time, the cost of services is also taken into account (in comparison with Switzerland, banks in Latvia provide services that are cheaper, while maintaining reliability and quality of service).
How were the accounts opened before 2016?
Opening an account in Ukraine and in Latvia are two totally different things. It’s quite easy for us – all you need is to provide a package of documents, come to the bank, sign bank documents and the account is open.
Opening an account in Latvia (just like in many other countries) consists of the following steps:
1) preparing documents about company that opens the account – corporate documents;
2) preparation of documents for the ultimate beneficiary (the real owner of the business) – confirmation of experience in this segment of the business, verification of welfare, reviews of partners;
3) submission of documents to the bank and an interview with a representative of the company (account manager);
4) review of documents by the bank.
Now more detailed:
If it is clear with the preparation of documents, then questions about confirmation of the beneficiary’s experience in the sphere of activities and his welfare arise.
The experience of the beneficiary is confirmed with such documents: CV, entries in the employment record book and availability of various diplomas and certificates that will show the person is familiar with the matter. The bank evaluates how the customer is informed in this segment, whether he has any business experience. Sometimes information on resident business (sole trader, LLC) or feedback from public business partners are provided. By the way, a public partner – is a company that can be found in Google, it has a website, and it is clear what it occupies itself with.
After the preparation of the documents, the representative and the beneficiary of the company go to the bank or the representative office of the bank to file documents and pass the interview. At this stage, it is necessary to have a nice chat with bank managers on the subject of business: what are we doing? Who are the partners? Why do we work in this segment? What is the turnover on account per month? Do you have an apartment / land / other real estate or a car?
The last question often “confuses” account openers the most. Why should we show what we have earned by our hard work? Why are we asked this kind of question? And why is this necessary? Everuthing can be explained very simply: the bank needs to understand who is in front of it. If a turnover of 50,000 dollars a month (that is 600,000 dollars a year) is declared on the account, and the client has no real estate or car, it is suspicious …
After receiving the documents and conducting the interview, bank managers start a long process of checking all the information provided: firstly, the representatives’ managers check the completeness of documents and surrender them to the Latvian office. A re-examination of documents by lawyers in the department of “compliance” is launched there. In this department the business owner is studied through all the open sources.
The result of such a study may be requests for additional documents: a salary certificate, a contract with a partner, arguments in writing and other documents that consultants may not always consider at the stage of preparing documents for the bank.
What changed in 2016?
The main part has been preserved, but the matter of the timeframe is seriously violated. This is due to the fact that banks work only with reliable clients and increasing their number is not so important to them. More time is spent on checking the company that opens the account, its beneficiary, representative and sometimes partners.
This year, the Baltic banks have been audited by independent auditors several times. One of the reasons for the examinations was the violation of the anti-money laundering policy. As the results there were fines, dismissals of bank employees, law enforcement investigations and legal proceedings.
One of the main sanctions was the closure of dollar correspondent accounts in Deutschebank. As a result, restrictions on dollar transactions have been imposed and rates have been increased.
And in conclusion …
Despite the fact that the procedure of checking clients in Latvian banks is becoming more and more complicated over the years, there is still a stable demand for such a service. Do not neglect the help of professional consultants to facilitate this procedure – they will help to prepare documents properly, as well as give valuable recommendations on the passage of an individual interview at the bank. But you need to remember that the real time of opening an account and a successful finale always depends on the person who opens the account, because he decides how quickly and accurately all the information is provided.