15 RISKS AN ACCOUNTANT MUST REPORT TO THE SRS

For some time now, the State Revenue Service has mandated that all accountants (who are considered subjects of the Law on the Prevention of Money Laundering and Terrorism Financing) must “report” their clients’ transactions based on specific criteria.

Do you know what these criteria are?

#1 The client is associated with persons with whom Latvian banks have terminated cooperation

#2 A private individual declares income, revenue, savings, assets, or changes in their value of suspicious origin

#3 A person establishes multiple single-person companies

#4 Incoming transactions consist of many small amounts, while outgoing transactions involve large sums

#5 Purchase of real estate at an obviously inappropriate price

#6 The transaction has no obvious legal purpose (or connection to personal or business activities)

#7 A private individual, in one or more transactions, invests cash in a commercial company, pays out, lends, or borrows $40,000$ euros or more from another private individual

#8 Evasion of tax payments

#9 The client provides unrealistic, confusing, or contradictory explanations regarding transactions

#10 Account turnover consists primarily of cash transactions

#11 Problems with client identification – the client is unwilling to provide standard identification information or provides it in minimal amounts, provides fictitious information that is difficult or expensive to verify, does not submit copies of identity documents, or the declared ultimate beneficial owner does not match the actual one

#12 The client performs complex or unusual transactions (which themselves or their specific terms have no clearly understandable economic or legal purpose)

#13 Unclear origin of funds used in the transaction

#14 Persons involved in the transactions share the same address

#15 A suspicious transaction involving a public organization, an association of public organizations, or a non-governmental organization (association or foundation)

As you can see, the indicators of suspicious transactions are quite vague and easily misunderstood…

On one hand, the need to eliminate the shadow economy and suspicious transactions is understandable.

On the other hand, these requirements conflict with accounting ethics. We are convinced that, over time, an accountant becomes as much of a  confidant to a company manager as their family doctor, lawyer, or psychotherapist. A client must be certain that none of these professionals will disclose confidential information or
report them at the first opportunity.

Therefore, outsourced accountants who carefully evaluate every client from the start act wisely, so that after signing the cooperation agreement, they can fully trust each other.

P.S. Next time, we will talk about what to do if a company’s account has been blocked. See you again online!