Checking a client is not something you decide to do. The law says when it happens, and at what amounts. Everything that follows — how deep to go, who the beneficial owner is, what to do when you cannot finish the file — already has an answer in the law.
Client checks in Latvia are not something a business decides to do when it takes someone on. The law says when they happen, and several of those moments have nothing to do with onboarding. Two of the duties they create run not to the client at all, but to the Enterprise Register and to the Financial Intelligence Unit.
Three questions decide every file.
One: has something triggered the checks
Checks are required before a business relationship starts, and before a one-off transaction in these cases:
| What happens | From |
|---|---|
| A transaction, or several that look connected | EUR 15,000 |
| A transfer of money, including by card, e-money or phone | EUR 1,000 |
| Currency exchange | over EUR 1,500 |
| A crypto-asset transaction | EUR 1,000 |
| Goods or services paid in cash | EUR 10,000 |
| Lotteries and gambling, stakes and winnings | EUR 2,000 |
Two more triggers have no amount attached. One is suspicion. The other is doubt that the client information you already hold is true or complete — and that is the one people forget, because it fires on an old client whose file was closed years ago.
One extension is easy to miss. An estate agent has to run checks on the other side of the deal — the person buying from, selling to or renting from its own client — before it is concluded.
Two: how deep do the checks go
The law has three settings, and your risk assessment decides which one applies.
Simplified checks are the setting people misunderstand most. You can use them only where the risk really is low in a way that matches your risk assessment and the national one, and where you have taken steps to understand the risks of your own business and of the client. Those are conditions to satisfy first, not a description of an easier life.
And simplified does not mean skipped. You still identify the client and still apply the checks, in a scope that matches the relationship and the level of risk. It is scaled down, and the scaling has to stand up against the assessment that justified it. The law names two client types for it: Latvian state and municipal bodies that are low risk, and companies whose shares are traded on a regulated market in an EU country.
There is also a narrow route based on the service itself, and every condition has to be met: a written contract; payment through an account at an EU bank; no suspicion; total value no more than EUR 15,000; proceeds that cannot benefit anyone else except on death or disability; and no possibility of cashing in during the transaction — or, where there is one, proceeds available only after at least five years, with no security, no assignment and no early termination.
Enhanced due diligence — the deeper version — is not a fixed package either. The law lists measures and you apply one or more depending on the risk: more information about the client and the beneficial owner, verified; whether the transactions fit the business the client says it does; where the money and the wealth came from; why the transaction is being done; approval from senior management; and closer monitoring afterwards.
Politically exposed persons. Where the client or its beneficial owner is a politically exposed person, a family member or a known close associate, enhanced due diligence is compulsory: senior management has to approve the relationship, the source of funds and the source of wealth have to be established and written down, and monitoring is closer. The part that catches people is the second one — your screening has to reach beneficial owners, not just the client in front of you.
The status does not expire by itself. You can stop the extra measures only once the person has been out of their public role for at least twelve months and the relationship no longer looks higher risk. Twelve months is a minimum, not a release date. The Financial Intelligence Unit publishes guidance on identifying these roles, including for clients abroad, and your own list may not be narrower than the law's.
Three: who the beneficial owner is, and where to look
You have to establish who the beneficial owner is and, depending on the risk, satisfy yourself that the person you have found really is that person, using a reliable and independent source.
The law says exactly what to record: name, identity code, date of birth, nationality, country of residence, how much of the company they hold or control, directly or indirectly, and how that control is exercised. If control runs through another company, that company has to be identified too.
On where to look, the law gives an order. Start with the Latvian Enterprise Register, then, depending on risk, add one or more of: a statement confirmed by the client, Latvian or foreign information systems, or finding the owner yourself. The register is where you start, not where you stop.
The duty that catches people out
If your checks turn up beneficial ownership information that does not match the Enterprise Register, you have to tell the Register — immediately, and no later than three working days — and explain the difference.
What happens next is fast. Within one working day, with no separate decision, the Register adds a warning that the registered information may not be true. It stays visible to other covered businesses, to law enforcement and to supervisors until it is withdrawn.
There is a protection worth knowing before you need it. A notification made in good faith is not a breach — whether or not the information turns out to be wrong, and whatever your contract with the client says. A confidentiality clause is not a reason to keep quiet.
When you cannot get an answer
If no individual can be identified after you have used every available means, you may treat the person holding office in the management body as the beneficial owner — provided the steps you took are reasoned and written down. That is a last resort, not a shortcut, and the documentation is the whole of it.
If the file cannot be completed, the consequences are not optional and not delayed: do not start the relationship, do not open the account, end an existing relationship without delay, and do not carry out the transaction. Each case is documented and assessed, and reported if there is suspicion.