Tightened requirements for virtual currency service providers

On June 30, 2022, the Law of the Republic of Lithuania on the Prevention of Money Laundering and Terrorist Financing (law No. VIII-275) amending Articles 2, 9, 25 and supplementing the Law with Article 25-3 was adopted. Changes tighten the requirements for the activities of virtual currency exchange operators and/or depository virtual currency wallet operators (hereinafter- VASP) and aim to increase the transparency of the segment and strengthen the management of various risks.

The changes that take effect on the dates indicated are listed below.

Enters into force on November 1, 2022:

• For VASP (private/public limited liability company – UAB/AB), the minimum authorized share capital is increased to 125,000 euros (the authorized share capital requirement of 2,500 euros currently applies). In addition, VASPs who have started to operate before the date of entry into force of this law and intend to continue to operate after the date of entry into force of this law, and whose authorized capital does not reach the value of 125 000 euros determined by the amendments, must submit the documents required to register the authorized share capital to the administrator of State Enterprise Centre of Registers no later than on December 31, 2022.
• Managing employees are prohibited from working for more than one VASP company unless several such entities belong to the same group of companies.
• It is established that the main activity of VASP must be carried out in Lithuania. The VASP cannot carry out its principal activities and provide services in another country and perform only functions or services in Lithuania that are not relevant to the nature of the activity of such an entity, or not perform activities in Lithuania at all.
• VASP must have a senior manager who is a permanent resident of Lithuania, as defined by the Law on Personal Income Tax of the Republic of Lithuania.
• Only natural persons of impeccable reputation can be members of the management and supervisory bodies and beneficiaries of VASP.
  
  

  Enters into force on February 1, 2023:

1. The administrator of the register of legal entities manages the lists of VASPs established in the Republic of Lithuania and branches of VASPs of member states of the European Union or foreign states and publishes them on its website.
2. It is established that the VASP must take measures to determine and verify the identity of the client and beneficiary before performing virtual currency exchange operations or transactions in virtual currency with funds equal to or exceeding 700 euros (until February 1, 2023, 1 000 euros) or an amount corresponding to it in foreign or virtual currency, or before depositing or withdrawing virtual currency from the deposit wallet of virtual currencies, the amount of which is equal to or exceeds 700 euros (until February 1, 2023, 1 000 euros) or an amount corresponding to it in foreign or virtual currency, regardless of whether the transaction is concluded in one or several interconnected transactions (the value of the virtual currency is determined at the time of the monetary transaction or transaction), except in cases where the identity of the client and the beneficiary has already been established.
   
   

   Enters into force on January 1, 2025:

1. The VASP must collect, store, and provide transfer or other transaction information about the initiator (a natural person or legal entity) of the transaction and information about the recipient of the transaction (a natural person or legal entity) to the virtual currency exchange operator, depository virtual currency wallet operator or financial institution in order to identify suspicious monetary transactions and, if necessary, take measures when performing a virtual currency exchange.