The Bank of Lithuania is studying the implications of providing financial institutions with information related to the prevention of money laundering. In response to the comments, the central bank has taken steps to meet consumer demands and improve service delivery.
The consultation provided valuable insights into where exactly the views of payment service providers and customers differ, leading to the most misunderstandings. Taking into account the comments and suggestions received, we have prepared measures to make the requests of financial institutions for customer identification information clearer and more individually tailored to users, as well as to make their provision easier and more convenient
Chairman of the Board of the Bank of Lithuania Gediminas Simkus
All participants in the Lithuanian financial market must comply with the laws on money laundering and the prevention of terrorist financing and other legislative acts. The KYC procedure is based on the constant collection, monitoring and updating of information about customers and the nature of their payments.
The main reason for users’ dissatisfaction with payment services is that they cannot communicate effectively with their customers. Consumers are unhappy that financial sector players require excessive information and documentation because they do not understand the legal language in which the requirements are formulated.
According to the Bank of Lithuania, payment service providers must inform their customers why they are requesting certain information, certain documents and where they can get them. It is good practice to provide contact information for a specific employee so that users can contact them directly if they have questions. Users who do not understand the requirements, who have no one to ask and therefore avoid providing information to financial market participants, often do so. This may result in the limitation of payment services or even the termination of the business relationship.
Clients, especially residents who are rarely financial professionals, should be made aware of legal requirements in simpler language. The Bank of Lithuania will help improve communication between users and service providers by providing additional information tools.
The use of individual questionnaires for certain user groups (such as students, pensioners, corporations, non-governmental organizations, etc.) to collect and maintain customer personal data is one of the proposals of the Bank of Lithuania. These questionnaires can be modified based on the previous one, and the consumer can also correct them (if necessary).
The Central Bank should consider whether it is necessary to amend the legislation so that financial market participants can receive documents, data or information from government information systems or registers (for example, verification of such information and data is not required by the client’s signature).
The Bank of Lithuania plans to collect information from financial market participants on the termination or refusal to establish a business relationship due to risk avoidance in order to limit the likelihood of risk aversion (i.e. the decision not to establish a business relationship or terminate it, thereby depriving the client of access to payment services, derisking, etc.). Currently, only those banks that have terminated or refused to start business relations with electronic money institutions and payment institutions are required to do this.