FATF AML Deficiency List
Non - Compliance with FATF 40 + 9 Recommendations
Corruption Index (Transparency International & W.G.I.)
Lithuania is not on the FATF List of Countries that have been identified as having strategic AML deficiencies
Compliance with FATF Recommendations
The last follow-up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Lithuania was undertaken in 2020. According to that Evaluation, Lithuania was deemed Compliant for 8 and Largely Compliant for 24 of the FATF 40 Recommendations. It was deemed Highly Effective for 0 and Substantially Effective for 1 of the Effectiveness & Technical Compliance ratings.
US Department of State Money Laundering assessment (INCSR)
Lithuania was deemed a ‘Monitored’ Jurisdiction by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR). Key Findings from the report are as follows: -
Lithuania is not a regional financial center. It has adequate legal safeguards against money laundering; however, its geographic location bordering Belarus and Russia makes it a target for smuggled goods and tax evasion. The sale of narcotics does not generate a significant portion of money laundering activity in Lithuania. Value added tax (VAT) fraud is one of the biggest sources of illicit income, through underreporting of goods’ value. Most financial crimes, including VAT embezzlement, cigarette smuggling, illegal production and sale of alcohol, illegal capital flight, and profit concealment, are tied to tax evasion. There are no reports of public corruption contributing to money laundering or terrorism financing.
There are no international sanctions currently in force against this country.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index 60
World Governance Indicator – Control of Corruption 75
Corruption is not a major impediment to business in Lithuania, but small and medium enterprises (SMEs) can be vulnerable to bribery and extortion, largely due to the pervasiveness of red tape and inefficient government bureaucracy. Public procurement and public services are the sectors most affected by corruption, and the country’s shadow economy undermines fair competition. The Criminal Code criminalises corruption in the public and private sectors, covering abuse of office, money laundering, active and passive bribery and the bribery of international civil servants and foreign government officials, but anti-corruption laws are not effectively enforced. High-level corruption is a problem as officials act with impunity. Companies indicate that facilitation payments and bribes are sometimes requested when in contact with some public officials or to obtain favourable judicial decisions. Gifts are regulated under Lithuanian law. For further information - GAN Integrity Business Anti-Corruption Portal
Lithuania gained membership in the WTO in May 2001 and joined the EU in May 2004. Lithuania's trade with the EU and CIS countries accounts for approximately 87.3% of total trade. Foreign investment and EU funding have aided in the transition from the former planned economy to a market economy. The three former Soviet Baltic republics were severely hit by the 2008-09 financial crisis, but Lithuania has rebounded and become one of the fastest growing economies in the EU. Lithuania’s ongoing recovery hinges on export growth, which is being hampered by economic slowdowns in the EU and Russia. Lithuania joined the euro zone on 1 January 2015 and is under review for membership in the OECD.
Agriculture - products:
grain, potatoes, sugar beets, flax, vegetables; beef, milk, eggs, pork, cheese; fish
metal-cutting machine tools, electric motors, television sets, refrigerators and freezers, petroleum refining, shipbuilding (small ships), furniture, textiles, food processing, fertilizers, agricultural machinery, optical equipment, lasers, electronic com
Exports - commodities:
refined fuel, machinery and equipment, chemicals, textiles, foodstuffs, plastics
Exports - partners:
Russia 13.7%, Latvia 9.8%, Poland 9.7%, Germany 7.8%, Estonia 5.3%, Belarus 4.6%, UK 4.5%, US 4.4%, Netherlands 4% (2015)
Imports - commodities:
oil, natural gas, machinery and equipment, transport equipment, chemicals, textiles and clothing, metals
Imports - partners:
Russia 16.9%, Germany 11.5%, Poland 10.3%, Latvia 7.6%, Netherlands 5.1%, Italy 4.5% (2015)
Investment Climate - US State Department
Lithuania is strategically situated at the crossroads of Europe and Eurasia. It offers investors a diversified economy, EU rules and norms, a well-educated multilingual workforce, advanced IT infrastructure, low inflation, and a stable democratic government. The Lithuanian economy is one of the fastest growing in the EU. The country joined the Eurozone in January 2015, and has started the accession process to join the Organization for Economic Cooperation and Development (OECD). Lithuania's income levels still lag behind the rest of the EU, with per capita GDP (at purchasing power parity) of approximately 75 percent of the EU average; this translates to a comparative advantage in terms of labor costs. According to preliminary data from the Lithuanian Statistics Department, at the end of 2014, the United States was Lithuania’s 17th largest investor, with cumulative investments totaling USD 180 million (1.2 percent of total FDI).
Following its election at the end of 2012, the current Lithuanian government started to focus on lowering barriers to investment, partnering with the private sector, and offering financial incentives for investors. In 2013, the government passed legislation which streamlined land-use planning, saving investors both time and money. “Invest Lithuania” is the government's principal institution dedicated to attracting foreign investment. In addition to its offices in Vilnius and major Lithuanian cities, Invest Lithuania has representative offices in Belgium, Kazakhstan, and the United States (Chicago).
The government provides equal treatment to foreign and domestic investors, and sets few limitations on their activities. Foreign investors have the right to repatriate or reinvest profits without restriction, and the government enforces awards decided by international arbitration tribunals such as the International Center for the Settlement of Investment Disputes (ICSID). Lithuania offers special incentives, such as tax concessions, to both small companies and strategic investors. Incentives are also available in seven Special Economic Zones located throughout the country.
The business community in Lithuania advocates for greater flexibility in the labor code, including access to foreign labor. U.S. executives report burdensome procedures to obtain business and residence permits, as well as some instances of low-level corruption in government. Transportation barriers, especially insufficient air links with European cities, remain a hindrance to investment, as does the lack of access to open, transparent information on tax collections and government procurement. Energy costs in Lithuania are declining as a result of diversification projects and lower global oil prices.
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