Know your customer

Know Your Customer principle or why do we ask questions?

Like elsewhere in the world, Latvian banks also implemented the principle of "Know Your Customer". For a bank it means to follow statutory procedures and requirements that are created for prevention of anti-money laundering and terrorist financing. Following this principle, banks have the right and obligation to obtain information about customers and the origin of their funds to ensure that they do not have a criminal content. All the information obtained is confidential.
Nordea follows the same principle in it's daily business. The questioning of every customer is a part of this process which helps to improve mutual cooperation between bank and customer; it ensures that business relationship is successful and long-lasting. We are confident that only by knowing our client we can provide excellent service, offer most appropriate bank products and services tailored to the customer needs and ensure outstanding customer service in every stage of our cooperation.

  • Client's questionnaire for private individuals (new Customers) can be found here.
  • Client's questionnaire for private individuals (current Customers) can be found here.
  • Client's questionnaire for legal entities can be found here.

If you, your family member or closely related person is a politicaly exposed person, please fill out the Declaration about politically exposed persons here.

The answers to frequently asked questions can be found here.

Why are banks asking questions? (source :The Association Of Latvian Commercial Banks).

"What information does bank ask the customer?"

Banks have the obligation to obtain information about customers and the origin of customers’ funds to ensure that they do not have a criminal nature. On daily basis banks have rights to obtain:

  • Customer identification information
  • Information on Politicaly exposed person's status
  • Information about the personal or business activities
  • Information  about customer's registered, residential ot business address
  • Information on the beneficial owner (**)
  • Information on the amount of income and the legal origin of the funds
  • Information on planned financial activities
  • Information on the links with USA (see FATCA requirements)

Politically exposed person is:

  1. a person who holds or has held a significant public position in Latvia or abroad
  2. a family member or relative  of a person who holds or has held  a significant public position in Latvia or aborad
  3. a person who is closely related to a person who holds or has held  a significant  public position in Latvia or abroad

A beneficial owner is a natural person:

  1. who owns or controls directly or indirectly at least 25 % of the equity capital or voting rights in an enterprise, or controls the business of a company in any other way
  2. who directly or indirectly has rights to assets, or who directly or indirectly controls at least 25 % of a legal formation, which is not an enterpise. A politically exposed person of an association is a person or a group of persons, for the benefit of whom the association has been established. A politically exposed person of a political party, a foundation, or a co-operative society is deemed the respective political party, a foundation, or a co-operative society
  3. for the benefit or in the interest of whom business relations are established
  4. for the benefit or in the interest of whom a single transaction, without establishing business relations, is made

Customer data updates on regular basis

Considering the fact that customers' data and financials change constantly bank needs to renew and keep customers' informantion up to date. Banks are obliged (*) to regularly obtain and update necessary KYC information, by asking Customers to complete special questionnaires, if required. Bank encourages Customers for their own convenience to provide all required information by completing specially designed questionnaire via Internet.

(*) Based on The Law on Prevention of Money Laundering and Terrorism Financing and Regulatory rules by the FCMC regarding enhanced customer due diligence issued for credit institutions and licensed payment and digital money institutions

Identity and authentication

To identify legal entity Bank will check:

  • the establishment or legal registration of a legal entity
  • information about the registered address of a customer
  • a power of attorney or any other documents, which approve the particular individual is entitled to represent the legal entity in business relations with the bank

Tax liabilities in the United States

Local authorities has signed an agreement with the US tax authorities, called FATCA (Foreign Account Tax Compliance Act). Under this agreement financial institutions all over the world are required to identify and report the aggregated amounts on accounts held by U.S. persons to Latvian State Revenue Service, who report to the US Internal Revenue Service (IRS).

You can find all forms on the IRS homepage.Opens new window

Automatic exchange of information under CRS

The CRS (Common Reporting Standard) is a global reporting standard aimed at addressing the issue of offshore tax evasion by disclosing financial accounts held by non-residents and automatically providing governments with that information. Like all other financial institutions, Nordea is obliged to collect data about new customers starting from 1 January 2016. The first reporting procedure to Baltic tax authorities will take place in the summer of 2017.

Cooperation between tax administrations is critical in the fight against tax evasion and in protecting the integrity of tax systems. A key aspect of this cooperation is the exchange of information. Under the CRS, jurisdictions like State Revenue Service obtain financial information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis.

The financial information to be reported regarding reportable accounts includes all types of investment income (including interest, dividends, income from certain insurance contracts and other similar types of income), as well as account balances and sales proceeds from financial assets.

How will customers in Latvia be affected

Starting 1 January, Nordea will ask all new customers to provide the bank with a list of countries where customers pay taxes and their taxpayer identification number (TIN).

Within the next two years, Nordea will contact existing customers who may be reportable under the CRS.

Frequently asked questions about CRS here.

Please be advised that Nordea cannot provide any CRS-related tax advice. If you have any tax-related questions, please contact a tax specialist or visit http://www.oecd.org/tax/.

FATCA / CRS Self-Certification forms
FATCA and CRS Self-Certification form Entity
FATCA and CRS Self-Certification form Individual

 
What happens if customer does not provide the information to the bank?

If a customer does not provide the requested KYC information and documents the bank may limit provision of banking services or may terminate the business relationship with the customer and request for early execution of obligations. If customer does not meet FATCA and CRS obligations, bank will report an information about those account holders to the State Reveue Service.

Client data confidentiality

The bank is obliged to guarantee the confidentiality of the identity, accounts, deposits and transactions of customers (Article 61 of the Credit Institutions Law)

Information regarding a customer and his or her transactions, which the bank acquires in providing financial services, in accordance with concluded contracts, is non-disclosable
information, which does not contain official secrets (Article 62(5) of the Credit Institutions Law).

Non-disclosable information at the disposal of a bank can be provided to the bank and its representatives, and in certain cases stipulated by the Credit Institutions Law – also to state
institutions and state officials (Article 63 of the Credit Institutions Law).

More information:
The Law on Prevention of Money Laundering and Terrorism Financing
The Credit Institutions Law
Regulatory rules by the FCMC regarding enhanced customer due diligence issued for credit institutions and licensed payment and digital money institutions
FCMC Recommendations for credit institutions and financial authorities for the determination of politically exposed persons, their family members and persons closely related to them, and for the study and monitoring of their transactions
Information by the Financial and Capital Market Commission
List of countries involved in the automatic exchange of information

 

If you have any questions, please contact your personal consultant at Nordea or Customer Support by calling (+371) 67 005 884 or writing to info@nordea.lv