Setting Up a Bank Account in the Baltics: New Rules

The Baltic States are a great launching pad for businessmen eager to get inside the banking world of Europe. Many entrepreneurs open bank accounts in Estonia, Latvia, and Lithuania. They are attracted by the low maintenance and service fees, simplicity and quickness of account opening with local banks.

The strong client flow raised regulator concerns: in June, Sweden’s financial inspection charged SEB Group a fine of 1 billion Swedish krona, and in March 2020 Swedbank was given a fine of 4 billion Swedish krona.

In view of the events, one should expect new rules and challenges when working with financial institutions in Latvia, Estonia, and Lithuania. This article offers an overview of new regulations and difficulties associated with setting up a bank account in the Baltics.

Baltic payment systems: how Baltic payment systems are penalized

Irrespective of the heavy fines imposed on ABLV Bank, payment systems continued to operate as normal. It should be noted that payment systems providing settlement account services to their customers must comply with AML requirements to the same extent traditional banks do.

The regulator surely responded to the violation of the above requirements: Mister Tango, UAB was given a big fine. The payment system did not terminate its operations but, following a thorough audit and review of internal policies, many clients were asked to close their accounts as soon as possible.

Implications: how does one set up an account with Baltic banks now?

With stories like above, users are sure to face complicated interactions with Baltic banks, as well as higher service prices. Several banks chose to refuse operations and services to companies that are not associated with the Baltic States. For instance, opening an account with an Estonian bank requires a local company, physical office, employees, customers, or suppliers, as well as a local director.

Furthermore, the quantity of required documents has been increased, with the verification becoming more thorough and stringent: foreign companies are now obligated to confirm the address which must coincide with the company’s country of registration.

The service costs have also changed: virtually all Baltic banks charge a fee for the account opening. And the account opening is not guaranteed.

Major bank and payment systems getting fines is evidence that regulators will be monitoring the operations of financial institutions in Estonia, Lithuania, and Latvia more carefully. Our advice is you prepare for the forthcoming changes. SBSB lawyers are highly experienced in setting up accounts with banks and payment systems in various jurisdictions. We will help you pick a perfect jurisdiction customized to all aspects of your business. Got any questions? Join our Telegram chat for free consultations.