For purposes of the Law on the Prevention of Money Laundering and Terrorism Financing, ‘beneficial owner’ means, in case of corporate entities, any natural person who owns or controls the customer, or in whose name, favour and interests a business relationship is established or an occasional transaction is performed, and who is at least:
In case of funds or trusts or similar legal arrangements or units, a beneficial owner is a founder, proxy, supervisor (manager), appointed beneficial owners, if not appointed, a group of persons in whose interests the legal arrangement has been established or operates, any other natural person who is actually exercising control over a trust, by means of ownership or otherwise.
The definition of a politically exposed person and a person closely associated with a politically exposed person may be found in Paragraph 18 of Section 1 of the Law on the Prevention of Money Laundering and Terrorism Financing of the Republic of Latvia:
1) politically exposed person – a person who in the Republic of Latvia, other Member State or third country holds or has held a prominent public office, including a higher official of the public authority, a head of the State administrative unit (local government), the Head of the Government, the Minister (the Deputy Minister or the Deputy of the Deputy Minister if there is such an office in the relevant country), the State Secretary or other official of high level in the government or State administrative unit (local government), a Member of Parliament or a member of similar legislation entity, a member of the management entity (board) of the political party, a Judge of the Constitutional Court, a Judge of the Supreme Court or of the court of other level (a member of the court authority), a council or board member of the Supreme Audit Institution, a council or board member of the Central Bank, an ambassador, a chargé d'affaires, a high-ranking officer of the armed forces, a council or board member of a State capital company, a head (a director, a deputy director) and a board member of an international organisation, or a person who holds equal position in such organisation.
2) family member of a politically exposed person – a person who, for a politically exposed person, is:
3) person closely associated with a politically exposed person – a natural person regarding whom it is known that he or she has business or other close relations with any politically exposed person or he or she is a stockholder or shareholder in the same commercial company with any politically exposed person, and also a natural person who is the only owner of a legal entity regarding whom it is known that it has been actually established in the favour of a politically exposed person.
Tax residency country is the country in which a legal entity is subject to taxation on the basis of certain characteristics of the determination of tax residency, such as place of registration, management location, place of business, etc. in accordance with the requirements of the applicable national laws and regulations. More information: www.bib.eu/en/oecd-crs
Indicators of Active Non-financial Entity
Pursuant to the provisions of Section 86 of Chapter XII of the Latvian law ‘On Taxes and Duties’, any non-financial entity (with or without the status of a legal person) shall be deemed an active non-financial entity if it meets at least one of the following criteria:
1) less than 50 percent of the revenue of the non-financial entity in the previous calendar year or within another corresponding reporting period is passive revenue and less than 50 percent of the assets of the non-financial entity held in the previous calendar year or within another corresponding reporting period are assets held to form the passive revenue referred to above. The following revenue shall be deemed passive revenue:
2) the shares of a non-financial entity are regularly traded on an established securities market, or the non-financial entity is an entity related to the entity the shares of which are traded on an established securities market;
3) the non-financial legal entity is a governmental entity, international organisation, central bank, or a legal entity that belongs to one of the abovementioned structures;
4) substantially all of the activities of the non-financial entity consist of holding (in whole or in part) the outstanding stock of, or providing financing and services to, one or more subsidiaries that engage in trades or businesses other than the business of a financial Institution, except that a non-financial entity does not qualify for this status if the entity functions (or holds itself out) as an investment fund, such as a private equity fund, venture capital fund, leveraged buyout fund, or any investment vehicle whose purpose is to acquire or fund companies and then hold interests in those companies as capital assets for investment purposes;
5) the non-financial entity is not yet operating a business and has no prior operating history, but is investing capital into assets with the intent to operate a business other than that of a financial Institution, provided that the non-financial entity does not qualify for this exception after the date that is 24 months after the date of the initial organisation of the non-financial entity;
6) the non-financial entity has not been a financial institution during the last five years and is in the process of liquidation or reorganisation of the assets of the entity with an intent to continue or resume an economic activity other than the economic activity of a financial institution;
7) the non-financial entity is mainly involved in financing and hedging activities with or for the related (associated) entities other than financial institutions, and does not provide financing or hedging services to an entity which is not a related (associated) entity, provided that the group of such related (associated) entities is mainly involved in an economic activity other than the economic activity of a financial institution;
8) the non-financial entity meets all of the following requirements if:
According to the provisions of Section 87 of Chapter XII of the Latvian Law ‘On Taxes and Duties’, a non-financial entity (with or without the status of a legal entity/person) which does not correspond to the description of an active non-financial entity shall be deemed to be a passive non-financial entity.
Passive non-financial entity*:
Governmental Entity* — a body governed by public law of the Republic of Latvia or another state, including a territorial formation of the state (for example, local governments of different levels, federal formations, rural territory or pagasts, city, municipality, state, province, district) or an agency or institution established (founded) by an administrative territorial formation of the Republic of Latvia or another state.
International organisation* — an organisation, which meets all following criteria:
An institution or agency wholly owned by an international organisation shall also be deemed an international organisation.
Financial institution* is a custodial institution, depository institution, investment institution, specified insurance company.
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