Active non-financial entity - A company (other than a financial institution) is considered active if the company’s:
1) income to more than 50% comes from sales of goods and services and
2) whose assets more than 50% is attributable to business activities relating to the sale of goods and services
Active companies includes, for example:
• A company whose revenue to more than 50% derives from manufacturing and/or sale of goods and/or services;
• A listed company or a related company (subsidiary/affiliate) of a listed company;
• Governmental entities/units and international organizations and companies owned exclusively by such entities.
Beneficial owner – is an individual who owns the legal entity Client; or controls the Client; or on whose behalf, for whose the benefit or in whose interest of whom the business relations are being established, or an occasional transaction is being executed, and who is at least: а) As regards legal entities or legal arrangement – an individual who in the form of direct or indirect participation holds more than 25 percent of the legal entity’s equity or voting shares, or who controls it either directly or indirectly, b) As regards legal arrangements – an individual who owns the legal formation or in the interest of whom the legal formation is created or is operating, or who directly or indirectly exercises control over it, including the founder, trustee or supervisor (manager) of such formation.
Financial institution – a merchant, branch or representative office registered in the Commercial Register, or a merchant registered in the relevant register of another Member State or a third country which is not a credit institution and which provides one or more financial services within the meaning of the Credit Institutions Law. Including the following shall be regarded as a financial institution
(a) an insurance company in so far as it provides life insurance or other insurance activities related to accumulation of funds, or a private pension fund;
(b) an insurance intermediary in so far as it provides life insurance or other insurance services related to accumulation of funds;
(c) an investment brokerage firm;
(d) an investment management company;
(e) a capital company which purchases and sells foreign currency cash;
(f) a payment institution;
(g) an electronic money institution;
(h) a loan and savings company;
(i) other payment service provider not specified in subparagraphs “f”, “g”, and “h”;
(j) alternative investment fund manager;
(k) a reinsurance service provider;
(l) a financial leasing service provider;
m) a person who is involved in consumer lending and to whom the Consumer Rights Protection Centre issues a special permit (license) for providing lending services.
Legal arrangement – an association of persons having independent legal capacity, as well as a disregarded entity with independent legal capacity and the structure of which may include the founder, the trustee, the supervisor (manager), or equivalent statuses, and the beneficiary – if no individual has been assigned as the beneficiary – being a person in whose interest the legal formation is established or operates, or any other individual who in fact exercises control over a legal formation through ownership or other means.
Passive non-financial entity - A company (which is not a financial company) is considered passive if:
1) more than 50% of its income is passive or
2) more than 50% of its assets are those that generate passive income.
Passive income can be, for example, dividends and interest. It can also be rent and royalties if the company does not have employees. Further, it may be annuities (often related to life insurances), capital gains/profits on the sale of assets/property that can produce passive income, certain insurance return or payment/redemption.
Politically exposed person (PEP):
1) A person currently or formerly employed in major public office, including a supreme official of state government, head of a state administrative unit (municipal government), head of government, minister (deputy minister or deputy to the deputy minister, if the relevant country has such a position), state secretary, or other high-level official in government or a state administrative unit (municipal government), parliament deputy or member of an equivalent legislative body, member of the management body (board) of a political party, judge (member of a court institution) in a constitutional court, supreme court or other court instance, member of the board or council of a supreme audit institution, member of the board or council of a central bank, ambassador, charge d’affaires, senior officer of the armed forces, member of the board or council of a state corporation, executive (director, deputy director) or member of the board of an international organisation, or any person holding an equivalent position in such an organisation, within the Republic of Latvia, a Member state or third country.
2) A Family member of a Politically exposed person:
a) Spouse or equivalent. A person is considered an equivalent of a spouse only if the laws of the relevant state provide for such status;
b) Child, child of a spouse or equivalent, or their spouse or equivalent;
c) Parent, grandparent or grandchild;
d) Brother or sister.
3) A close associate of a Politically exposed person – an individual known to have business or other close ties with PEP, to be a stockholder or shareholder in the same corporation with PEP, or an individual that is the sole owner of a legal entity known to have been established for the actual benefit of PEP.
Shell arrangement - a legal person characterised by one or several of the following indications:
a) has no affiliation of a legal person to an actual economic activity or the operation of a legal person generates a minor economic value or no economic value at all, and the subject of the Law has no documentary information at its disposal that would prove the contrary;
b) laws and regulations of the country where the legal person is registered do not provide for an obligation to prepare and submit financial statements for its activities to the supervisory authorities of the relevant country, including annual financial statements;
c) the legal person has no place (premises) for the performance of economic activity in the country where the relevant legal person is registered.
United States person – any person meeting at least one of the following criteria:
1) The individual has citizenship or a valid residence permit (Green Card) in the U.S.;
2) The individual’s tax residence country is the U.S.;
3) The individual was born in the U.S.;
4) The legal entity has a phone number with a U.S. country code;
5) The legal entity is registered in the U.S.;
6) The residential or correspondence address of the individual is in the U.S. (including a P.O. Box in the U.S.);
7) A Power of Attorney has been issued to an individual/legal entity with an address in the U.S.