Lithuania: New reporting requirements for outgoing transfers as of 1 May 2024!

​​This obligation applies to entities within the EU whose proprietary rights are directly or indirectly held for more than 40 percent by: a) a legal person, entity, or body established in Russia; b) a Russian national; or c) natural person residing in Russia.

  

Kindly note, that the reporting obligation also extends to credit and financial Institutions, as stipulated in Paragraph 2 of Article 5r.

 

The key objective of this requirement is to enable national competent authorities (NCAs) to more effectively assess whether certain types of transfers carry a risk of violating sanctions related to Russia, while also aiding in the mapping of Russia’s revenue sources.

 

​The initial reporting by obligated operators, as outlined in paragraph 1 of Article 5r, should encompass the period from 1 January to 31 March 2024. However, the requirement to submit this report does not come into effect until 1 May 2024. This provision grants obligated entities more time to fulfill this initial reporting, streamlining compliance with this new obligation. Starting with the second quarter (Q2) of 2024, reporting is due two weeks after the conclusion of each quarter. For instance, for Q2, the deadline is 15 July 2024; for Q3 15 October 2024; for Q4 15 January 2025; and for Q1 2025 15 April 2025.

​The Commission has released a reporting template for use by the entities concerned and EU banks.​ It is important to note that while this template is recommended, it's not mandatory for the entities and EU banks to utilize it.

 

Navigating the intricacies of financial regulations requires a keen eye for detail. The latest measure extends to cover all outbound transfers initiated by relevant Russian-owned companies, even those intended for profit repatriation.

 

This measure applies to all types of funds, regardless of the currency. At its core, Article 5r emerges as a guiding lighthouse, addressing transfers held within branches of EU credit or financial institutions or operators located outside the EU.

      

However, it is imperative to note the boundaries set by Article 5r – it does not extend its reach to transfers held in subsidiaries of EU entities operating outside the EU's jurisdiction.

              

Delving deeper, the meaning of "indirect transfer of funds out of the EU" adds some sort of complexity. Imagine funds originating from an EU entity, traversing through intermediaries within the EU, before reaching a recipient beyond the EU borders.

 

When it comes to reporting, needless to highlight the importance of precision. There exists no minimum threshold for individual operations; instead, a cumulative threshold of 100,000 EUR applies within each reporting period, be it quarterly or semesterly.

 

It is crucial to bear in mind that reporting is more than just numbers – it is about capturing the bigger picture. Therefore, aggregate ownership must be attentively accounted for. And lastly, the crucial point to note is that indirect ownership can be understood as the absence of nominal ownership over the entity, instead, it is established through a chain of intermediaries.

 

Overall, in this ever-evolving regulatory landscape, understanding of above-mentioned nuances is essential. These clarifications serve as a cornerstone, fostering compliance with confidence and precision.​