Under the Latvian AML Law, the UBO is the natural person who ultimately owns or controls a legal entity. For corporations, a UBO is typically identified as a natural person who directly or indirectly owns more than 25% of the capital shares or voting stock of the legal entity. A UBO can also be an individual who controls the legal entity through other means. If, after exhausting all reasonable efforts, it is impossible to identify a UBO based on the criteria above, the law establishes a specific procedure. The entity must file a reasoned statement with the Register of Enterprises confirming this fact. In such cases, for their own Know Your Customer (KYC) purposes, obliged entities like banks may then identify the senior management of the company as the UBO.

Which Entities Must Register Their UBO?

The obligation to register a UBO applies to most legal entities registered in Latvia, including all commercial companies (such as SIA and AS), associations, foundations, cooperatives, and branches or representative offices of foreign entities. The scope is very broad, covering nearly all forms of legal persons. The law provides for a very narrow exemption for shareholders of publicly listed companies, but only if their control stems solely from their status as a shareholder in a company that is subject to equivalent international transparency standards. This exemption is interpreted very strictly by the Register of Enterprises.

The UBO Identification and Registration Process in Latvia

The process involves identifying the UBO and submitting the required information to the Register of Enterprises. For new entities, this information must be provided during the company formation process. For existing entities, any changes to the UBO data must be submitted within 14 days of the information becoming known or the change occurring. The application must include the UBO’s personal data and details on the manner of exercising control, supported by documentary evidence if requested. ECOVIS provides full support throughout this process, from analyzing the complex ownership structures to managing the registration with the authorities.

Public Access to the Latvian UBO Register

Latvia has maintained a high level of transparency. Following the 2022 ruling by the Court of Justice of the European Union, Latvia has explicitly decided to keep its UBO register publicly accessible. The public can view current UBO data free of charge through the Register of Enterprises portal. The information available includes:

• Full name
• Personal ID number (or date of birth, nationality, and ID document details for foreigners)
• Nationality
• Country of residence
• Information on the nature of their control

The public portal can be accessed via the Register of Enterprises website.

Consequences of Non-Compliance in Latvia

Failure to comply with UBO registration duties carries not insignificant sanctions that can directly impact a company’s operations, finances, and legal standing. The primary consequences include:

• Fines and Criminal Liability: The failure to register a UBO or the provision of false information can result in administrative fines ranging from €70 to €700. More seriously, board members who knowingly provide false data to the Register of Enterprises may face criminal liability, including imprisonment for up to one year, community service, or a financial penalty.
• Risk of Company Liquidation: The Register of Enterprises has the authority to initiate a simplified liquidation procedure for a company that fails to comply with its UBO reporting obligations. This is a severe measure that can lead to the forced dissolution of the business.
• Business and Financial Restrictions: Obliged entities, such as banks and financial institutions, are required to terminate business relationships with companies that fail to provide satisfactory UBO information. This can result in frozen bank accounts and an inability to conduct normal business operations. Furthermore, non-compliant companies may be restricted from participating in public procurement tenders.

Ensure Your Compliance and Avoid Penalties in Latvia

Correctly identifying your Ultimate Beneficial Owner and ensuring their proper registration is a critical legal requirement. Our team of experts provides a comprehensive service that covers both the UBO identification based on your specific corporate structure and the complete handling of the registration process. By entrusting this task to us, you can be confident in your compliance and avoid the severe penalties associated with any errors.