CMS Expert Guide to Crypto Regulation in Lithuania

The operator of a depository virtual currency wallet and the operator of a virtual currency exchange must take measures to identify and verify the identity of the client and the UBO:

• before entering into a business relationship;
• before carrying out occasional virtual currency exchange transactions or occasional virtual currency transactions in funds equal to or exceeding EUR 700 or
  • its equivalent in foreign or virtual currency, or
  • making an occasional deposit in a virtual currency wallet or
  • an occasional virtual currency transaction, or
  • an occasional virtual currency transaction in a foreign or virtual currency.

An occasional withdrawal of virtual currency in an amount equal to or exceeding EUR 700 or its equivalent in foreign or virtual currency, whether the transaction is made by means of one or more interrelated transactions (the value of the virtual currency is determined at the time of the monetary transaction or at the time of the conclusion of the transaction), except where the identity of the customer and the beneficiary has already been established;

• where there are doubts as to the correctness or authenticity of previously obtained customer and recipient identity data;
• In case of multiple interlinked monetary transactions, which in total reach EUR 700, the identity of the customer must be established as soon as the multiple monetary transactions are found to be interlinked.

Virtual currency exchange operators and operators of depositary virtual currency wallets are also obliged to notify the FCIS about suspicious monetary operations or transactions.

Virtual currency exchange operators and operators of depositary virtual currency wallets must keep information that links the address of the virtual currency to the identity of the owner of the virtual currency for a period of 8 years from the end of the transaction or business relationship with the customer.

Virtual currency exchange operators and operators of depositary virtual currency wallets must:

• take measures and identify the customer and the beneficial owner as well as verify their identity before carrying out virtual currency exchange operations or transactions in virtual currency with funds amounting to 700 EUR or more, or the equivalent amount in foreign or virtual currency, or before depositing virtual currency to or withdrawing virtual currency from the depository virtual currency wallet in the amount equal to 700 EUR or more, or the equivalent amount in foreign or virtual currency, whether that transaction is carried out in a single operation or in several operations which appear to be linked (the value of the virtual currency is determined at the time the monetary operation is carried out or the transaction is concluded), except for the cases where the customer and the beneficial owner have been already identified.
• notify the FCIS of the customer identification data and information on performed virtual currency exchange operations or transactions in virtual currency, if the value of such monetary operation or transaction amounts to 15 000 EUR or more, or an equivalent amount in foreign or virtual currency, whether the transaction is carried out in a single monetary operation or in several operations which appear to be linked. For the purposes of this article, several linked monetary operations shall mean several daily virtual currency exchange operations or transactions in virtual currency when the total value of operations and transactions in funds amounts to 15 000 EUR or more, or an equivalent amount in foreign or virtual currency.
• report to the FCIS about suspicious monetary operations or transactions.
• establish internal policies and internal control procedures related to:
  • Identification of the customer and of the beneficial owner and verification of their identity.
  • Risk assessment and risk management having regard to the types of identified risk.
  • Organisation of monitoring of business relationships and/or operations.
  • Implementation of international financial sanctions and restrictive measures.
  • Submit reports and information to the FCIS.
  • Keep registers.
  • Store information specified in the Law.
  • Update information concerning the identification of the customer and of the beneficial owner.
  • Organise training for employees to properly familiarise them with requirements for the prevention of money laundering and/or terrorist financing.
  • Ensure the distribution of functions in the financial institution in the implementation of money laundering and/or terrorist financing prevention measures, as well as the management and communication of information on the fulfilment of requirements.

Currently, such activities are not subject to licensing in Lithuania. However, the virtual asset service provider shall undergo the authorization (registration) process before provision of crypto-related services.

Virtual currency exchange operator or a depositary virtual currency wallet operator before provision of virtual asset related services shall inform the Register of Legal Entities of the Republic of Lithuania about the commencement of mentioned activities no later than within 5 business days from the commencement of activities.

Additionally, virtual asset service providers must appoint an AML officer, who has to be a senior officer responsible for implementation of the AML/CTF measures in the company and liaising with the supervisor, i.e. Financial Crime Investigation Service (FCIS). AML officer must be a permanent resident of Lithuania, as defined by the Personal Income Tax Law of the Republic of Lithuania and can represent only one virtual asset service provider at the same time, except in cases where the companies belong to one group of companies.

If the company has a board, it must also assign a board member to oversee the company’s AML/CTF measures implementation and a senior employee (AML officer) for liaising with the FCIS. If board is not former, the CEO of the company shall take over this responsibility.

The FCIS shall be notified in writing regarding the designation as well as of any replacements of such employees by indicating contact details of respective employee not later than within 7 business days from the date of their designation or replacement.

It shall be noted that virtual asset service providers are subject to shareholder/UBO/directors suitability requirements (i.e. a person found guilty of committing a serious crime against property, property rights and property interests, the economy and business order, the financial system, the civil service and the public interest, and has an unexpired or unexpunged conviction is deemed unsuitable).

Our costs of assisting with the establishment of a company, registration and the drafting of internal procedures would be around EUR 10,000-EUR 20,000 depending on the scope of involvement/contribution/readiness of the client for no-complication cases. For complicated cases (e.g. issues with opening bank account due to UBOs, etc.) we would charge for solving more complicated/non-standard matters at hourly rate EUR 120-200 (+VAT if applicable) depending on the seniority of the lawyer completing the task.

Additional costs include initial share capital (currently min EUR 2,500 for private limited liability entities125,000 for virtual asset service providers), notarial, registration and translation.

There will be costs related to offices. The company must have a registered office in Lithuania, offices can be rented (office and/or registered address (only)), employee costs (company must have at least general manager and an AML officer (function of AML officer could not be outsourced, AML officer must be employed under the employment contract within virtual asset service provider).

Our costs of assisting with the establishment of a company, registration and the drafting of internal procedures would be around EUR 10,000-EUR 20,000 depending on the scope of involvement/contribution/readiness of the client for no-complication cases. For complicated cases (e.g. issues with opening bank account due to UBOs, etc.) we would charge for solving more complicated/non-standard matters at hourly rate EUR 120-200 (+VAT if applicable) depending on the seniority of the lawyer completing the task.

Additional costs include initial share capital (currently min EUR 2,500 for private limited liability entities125,000 for virtual asset service providers), notarial, registration and translation.

There will be costs related to offices. The company must have a registered office in Lithuania, offices can be rented (office and/or registered address (only)), employee costs (company must have at least general manager and an AML officer (function of AML officer could not be outsourced, AML officer must be employed under the employment contract within virtual asset service provider).

The current regime has implemented stricter requirements, as amendments of the Law in respect of crypto businesses. The key changes include:

• Higher share capital requirements are already in place, the share capital has to be at least 125,000 EUR, implemented since November 1 2022.
• stricter requirements as to the reputation of the members of management and supervisory bodies or the recipients of such persons;
• prohibition for AML officers to represent more than one crypto company at the same time (unless they belong to the same group of companies);
• obligations to have at least one senior manager permanently residing in Lithuania to ensure proper AML/CTF requirements compliance and efficient liaison with the FCIS;
• prohibition to open anonymous accounts or accounts with fictitious names;
• all virtual currency exchange and depository wallet operators will be included in the public list maintained by the Register of Legal Entities;
• the requirement for conducting activities in Lithuania.

The current regime has implemented stricter requirements, as amendments of the Law in respect of crypto businesses. The key changes include:

• Higher share capital requirements are already in place, the share capital has to be at least 125,000 EUR, implemented since November 1 2022.
• stricter requirements as to the reputation of the members of management and supervisory bodies or the recipients of such persons;
• prohibition for AML officers to represent more than one crypto company at the same time (unless they belong to the same group of companies);
• obligations to have at least one senior manager permanently residing in Lithuania to ensure proper AML/CTF requirements compliance and efficient liaison with the FCIS;
• prohibition to open anonymous accounts or accounts with fictitious names;
• all virtual currency exchange and depository wallet operators will be included in the public list maintained by the Register of Legal Entities;
• the requirement for conducting activities in Lithuania.