After the liquidation of ABLV Bank and the insolvency of PNB Bank and the start of so-called “overhaul” of the Latvian financial system, a variety of measures were taken in order to significantly strengthen the fight against the legalization of proceeds from crimes. Therefore, issues related to freezing and seizure of funds in bank accounts and need to prove the legality of the origin of funds became the most relevant during last years.
For the first quarter of 2020 only, the Financial Intelligence Service of Latvia has blocked financial assets totalling more than 159 million Euros, which is 4 times the amount of blocked funds for the same period in 2019. A significant part of these funds is made up of the funds of clients of ABLV Bank and PNB Bank where questions were raised about the legality of their income.
A court decision is not needed to freeze funds. Rather, at some further stage it will be necessary to keep the arrest effective, but first decision to prohibit the disposal of property is taken without any judicial substantiation.
If credit institutions (banks) have suspicions of the legality of the funds of an individual or a legal entity such funds can be frozen by order of the Financial Intelligence Service (FIS) for a period specified by law (as a rule, the five-day initial freezing period is extended by 45 days).
In practice, in order to unlock frozen / seized funds, it is necessary to work with the very reason of freezing. The funds may be released upon providing evidence that the funds arrested are of legal origin and are commensurate with the legal income of their owner.
The answer to the question of how to do this in practice, what specific actions to take, what documents to collect, will be individual for each specific case. We can only say that combating the freezing of funds is a rather long and difficult task that requires qualified legal assistance.
NJORD is well known among Latvia law firms for assisting clients with the issues mentioned above. If you have any questions or need additional consultation in connection with the above information, please contact NJORD Law Firm Riga office – [email protected], t. +371 67 313 315.
NJORD is law firm with offices in Denmark, Estonia, Latvia and Lithuania. We have over 200 employees, about a half of which are lawyers. Our Dispute Resolution Department is renowned for successfully assisting famous local customers as well as leading international companies, while being the first choice for Scandinavian, Baltic and Russian customers. We offer a full service in civil, administrative and criminal proceedings (especially in cases related to the property acquired by criminal means, money laundering and tax crimes). Our lawyers have extensive knowledge of the principles, methods and practice of national courts, prosecution authorities and other law enforcement agencies. We are often recommended and hired as litigation attorneys.