I look forward to promoting stronger U.S.-Latvia ties and working with AmCham members to ensure Latvia is a trusted destination for international business.
John Tully, Chairman of the Board of MikroTik
At the start of 2024, AmCham members collected examples of their experiences obtaining financial services in Latvia. This culminated in a paper detailing specific instances where opening bank accounts and other banking interactions proved unnecessarily difficult, and recommendations for improvement were provided. The paper was submitted to the Bank of Latvia and the Financial Association of Latvia (FAL). AmCham Latvia met with the Bank of Latvia on January 23 and with FAL on June 3 to discuss current issues for foreign investors and future cooperation models.
The paper detailed complications on both the individual and business level. For individuals, some banks required additional documents for foreign workers to open a bank account, even though maintenance permits and employment contracts had already been provided. Payment freezes also occurred, in addition to the practices of some banks to impose one-time costs or monthly account service charges for foreign employees. For businesses, it was stressed that the research process into a potential client has unclear timelines and fees. An undesirable level of cooperation between the government and banks has been observed that often requires the re-submission of documents. Banks also often require the drafting of non-existent business plans and submission of private accounts of beneficiaries, and publicly quoted and well-known companies often face unnecessary scrutiny. Opening a bank account can take several months, which has negative consequences for starting a business in the country. There have also been complications with VAT numbers that result in monetary consequences for the investor and difficulties with cooperation agreements. As a result, the paper recommended a more predictable process, closer cooperation between the public and private sectors, greater opportunity for remote identification, fixed fees or capped amounts for the research process, and a reduced bureaucratic burden in terms of document submission.
On July 10, FAL sent a letter to AmCham addressing these concerns after conducting in-depth studies of the issues and consultations with credit institutions. They agreed to raise the issue of document expiration dates with the Bank of Latvia and Enterprise Registry, and explained the introduction of a new model that will allow banks to access information already provided to the Enterprise Registry. They clarified how credit institutions may choose to request a business plan, CV, or contracts with cooperating partners based on their independent risk assessment. FAL also advocated for the standardization or regulation of client research fees. They stressed that credit institutions should publicize their target industries, risk appetite, and specific requirements for potential clientele to improve cooperation and understanding. FAL also clarified that concerns about VAT numbers should be discussed with the State Revenue Service. In conclusion, they drew attention to the fact that foreign investors are still required by law to undergo the research process by banks, and activity with LIAA, for example, does not provide additional guarantees or advantages. Specifically for American investors, obtaining information from public sources has proven to be a significant challenge, so clients providing clear information and documentation can prevent delays in opening bank accounts.
Members are encouraged to submit concrete examples if such occur in the future to us and/or directly to FAL and the Bank of Latvia to improve their experience.
AmCham is a place to meet representatives of other industries and understand the business environment.
Signe Velina, Market Access Manager Latvia of Johnson & Johnson