In accordance with Section 1(5)(a) of the Law on the Prevention of Money Laundering and Terrorism Financing (hereinafter referred to as 'the Law'), the true beneficiary (PLG) is a natural person, the owner of a legal person, or who controls the client, or on whose behalf, a business relationship is established or a case-specific transaction is carried out, and it shall be at least for legal persons: a natural person who, in the form of a direct or indirect holding, holds more than 25 per cent of the capital shares or voting shares of a legal person or who controls them directly or indirectly. The 25 per cent criterion, by analogy, for the purposes of clarifying the size of a qualifying holding, may also be applied to other legal entities, not only to capital companies. That provision lays down THE characteristics OF THE PLG, i.e. the PLG is always a natural person who owns or is in the interest of which a particular legal person is established or operates, or whose direct or indirect control over the legal person is exercised.
The Financial Transaction Working Group (FATF) guidelines 'Transparency and True Beneficiaries' issued in October 2014 are interpreted AS a natural person who owns or controls the 'client' and/or the natural person for whom the transaction is being carried out. It also includes those persons exercising final control over the legal person. 'Ultimately owned or controlled' and 'exercising final control' refers to situations where ownership/control is exercised through ownership or other means of control other than direct control. An essential feature of THE definition OF THE PLG is that it goes beyond legal ownership and control. The FATF definition focuses on a natural person who actually owns a legal person, who exercises the powers of senior management of a legal person or the assets of a legal person, as well as a natural person exercising effective control over the legal person (whether or not the person holds an official position in the legal person).
It shall be indicated that, in the case of direct participation or control, THE legal person OF THE PLG shall be controlled directly and may result from the exercise of ownership or lawful control (e.g. a member of the board). However, in the case of indirect participation or control, the control shall be exercised through another person, whether natural or legal. Indirect control may be exercised by a variety of means, such as a mutually concluded contract or by means of a dominant influence (for example, the dominant influence of a member of the association or a member of the board of directors), by financing the association through creative links or contractual obligations. Members of the association may also cooperate with each other to increase such indirect control through another person by entering into formal or informal contracts, as well as by exercising their powers to appoint senior management of the association.
The law does not contain a specific framework for the obligations specified, depending on the nature, nature or purpose of the legal person's activities. It should also be noted that the legal person is a legal fiction, followed in each case by natural persons who organise, manage or control it, so that there is no situation in which THE PLG does not exist, it may not be possible to clarify it in accordance with the definition laid down in the Law. Consequently, there cannot be a situation and the Law does not provide for the registration of information in the registers carried by the Enterprise Register that any legal person does not have A PLG.
According to the annotation of the 'Amendments to the Law on the Prevention of Money Laundering and Terrorism Financing', if members of the association exercise their rights only as members of the association in accordance with the rights and obligations set out in the Law on Associations and Foundations, such member shall not be considered TO be MEMBERS OF THE PLG. A case in which members of the association do not exercise their rights solely as members of the association could be, for example, if the members of the association are acting for a purpose other than that laid down in the articles of association. It should be noted that the purpose of the associations, which is specified in the articles of association, is limited to compliance with the Constitution, laws and international treaties binding on Latvia, and may be directed at the interests of public benefit and its members. It should be noted that in order for the purpose of the association to be directed towards the general benefit of the company, the association should not be registered as a public benefit organisation. In cases where members of the association act to achieve their individual objectives, the number of members of the association should be assessed. In the light of the above, in the case of associations where their members exercise their rights only as members of those legal entities and the purpose of the association is directed at the public benefit or the associations, the aim is to focus on the interests of members, but the number of members is large: IT will not be possible to establish THE PLG unless those legal persons are actually, in accordance with THE definition OF THE PLG, controlled by any specific physical persons. people.
Example 1: The purpose of the association covers a wide range of individuals – IT will not be possible TO identify THE PLG in a specific case unless it is actually controlled by certain individuals, according to THE DEFINITION OF THE PLG. In this case, the number of members of the association has no role to play;
Example 2: The objectives of the association are focused on the interests of its members, but the number of members is high: IT will not be possible in THE particular case OF THE PLG to clarify it unless it is actually controlled by a particular individual, as defined IN THE FAO;
Example 3: The objectives of the association are focused on the interests of its members and the number of members is small (up to 4 members) – as members of THE association, unless in fact, according to the DEFINITION OF THE PLG, other individuals are controlled.
Consequently, the purpose of the association is essential for the purpose of clarifying THE association PLG: whether the activities of the association are directed towards the general benefit of the company or the interests of its members, as well as the active number of members of the association.
By analogy, taking into account the definition of political parties and trade unions as defined in the regulatory framework of the legal entities concerned, as well as the requirements for the purposes and number of members, a similar situation applies to those legal persons. In view of this, in the case of associations, trade unions and political parties, if their members exercise their rights only as members of those legal entities, it will be impossible to identify the true beneficiaries, unless those legal entities actually control certain individuals, such as the members of the executive body, in accordance with THE definition OF THE PLG. For example, in situations where members of the association no longer actively exercise their rights of members, and in fact only the members of the executive branch are the members of the association, all decisions are taken and all transactions are conducted for the benefit and benefit of one (or more) individuals, rather than taking into account the purpose of the association and the interests of its members. These persons may be members of the association or members of the executive bodies of the association (direct control), as well as persons who are neither founding members of the association nor members of the executive bodies (indirect control). Control may also be presented, even if it is not actually carried out, but, for example, one person uses and benefits from the financial assets of the association.
In the light of this, the situation should be assessed on an individual basis in each legal person, namely whether, according to the actual situation, a natural person has control over the legal person concerned. IN most associations, trade unions and political parties, THE PLG will not be able to find out.
If the association, the trade union, the political party has used all possible means of clarification and has concluded that it is impossible to identify any natural person, THE PLG, and doubts that the association, the trade union, the political party has the true beneficiary, must certify it in the application, stating the grounds on the ground.
At the same time, it should be noted that in cases where it is not possible to identify legal persons FOR THE purposes of Article 18, Paragraph seven of the Law, entities specified in Section 3 of the Law (e.g. credit institutions, outsourcing accountants, sworn notars, etc.) may be considered as the true beneficiary of a legal person to be a person who holds a senior management office in that legal person.. Accordingly, in cases where information is recorded in the Enterprise Register that IT is not possible to clarify THE PLG, one, several or all members of the Management Board will have to be indicated in accordance with the Law in order to allow the entities specified in Article 3 of the Law to carry out customer research activities - the legal person as THE PLG, when completing customer survey questionnaires, taking into account the assessment of the subject of the Law. the essential circumstances.
Identification of true beneficiaries
As in other legal persons, associations, trade unions, political parties, pursuant to the Law 18. The arrangements laid down in Article 1 shall, where it has grounds to believe that it has become an association, trade unions, political party PLG, have an obligation to notify that fact to the legal person concerned. The leadership of the association, trade unions, political party has a responsibility to find out, on a reasonable basis, whether it does not have A PLG, and whether the (cleared) information about THE PLG is true.
Under 18 of the Law. The fourth paragraph of Article 1 and 18. The first paragraph of Article 2 shall, without delay, but not later than within 14 days from the date of the relevant information, submit an application to the Enterprise Register for the registration of THE information concerning THE PLG.
On the other hand, for newly established associations, trade unions and political parties under the Law 18. For the first sentence of the second paragraph of Article 2, when making an application for registration (founding) of an association, trade union, political party to the Enterprise Register, the application shall contain information regarding its PLG in accordance with 18. The requirements of Article 2.
In the light of the above:
- In the case of registration of a new association, trade union, political party, the application for registration must also include information on THE PLG;
- The association, trade union, political party shall, without delay, but not later than within 14 days of the date of receipt of the information on the true beneficiaries or of the changes to the relevant information, submit an application to the Enterprise Register for registration of the information on THE PLG or for registration of the changes made to that information.
Information to be submitted
The information to be stored in the legal person regarding THE PLG shall be specified in the Law 18. In the fourth paragraph of Article 1. According to the Law 18. Section 2, first paragraph, Law 18. The information specified in the fourth paragraph of Article 1 shall also be submitted to the Enterprise Register, except for the documentary justification of the control carried out, as well as information regarding the date of birth, month and year of the person holding the Latvian personal identity number, the number of the identification document and the date of issue, the State and the institution which issued the document.
It shall be indicated that in accordance with the Law 18. The information provided for in the fourth paragraph of Article 1 concerning THE FAO, including the documentary justification for the control carried out, must also be kept by the legal person himself.
At the request of the Enterprise Register of the Republic of Latvia, in order to ensure the reliability of the information submitted, the association, trade union, political party shall submit:
- the documentary justification for the control carried out;
- a document confirming the relevance of THE information identified BY THE PLG:
- a notarised copy of the identity document;
- a statement of the foreign population register;
- other documents equivalent to those documents;
- a document supporting proof that IT is not possible to clarify THE PLG.
In the light of the above, the following information shall be recorded regarding the true beneficiaries of an association, trade union, political party in the registers carried by the Enterprise Register:
- name; surname; personal identity number (if any - date of birth, month, year, number of identity document and date of issue, country and institution which issued the document); nationality; country of residence; way of exercising control over the legal person:
- through the status of the legal person:
- as a member; as a representative of an executive or administrative body; as a separate person who controls (if the true beneficiary indirectly controls the representatives of the founder, executive or administrative body):
- on the basis of the authorization agreement; on the basis of ownership; on the basis of the transaction relationship; other (free text field with the possibility of entering undefined form); information on the person through whom the control is exercised (indicating if any of the types referred to in points 6.2 or 6.3 is indicated in which the control is being exercised):
- the given name, surname, personal identity number of a natural person (if the person does not have a personal identity number - date of birth, month and year); the legal person (may also have a foreign legal person) - name, registration number and legal address).
Under 18 of the Law. The second sentence of the second paragraph of Article 2 - where the association, trade union, political party has used all possible means of clarification and has concluded that it is impossible to identify any natural person, THE PLG, and doubts that it has THE PLG, must be confirmed in the application, with a minimum indication of the reasons. In such a case, it will be registered in the relevant register that IT is not possible to clarify THE PLG.