Proving the involvement of legal entities – credit institutions – in ‘stand-alone’ money-laundering cases

Initially, I would like to draw attention to and analyse the most important legal acts, which is the legalization of criminally obtained funds and what is understood by it both in the Republic of Latvia and internationally.

In the Republic of Latvia, criminally obtained funds are defined in the first part of Section 5 of the Law on Legalization of Criminally Obtained Funds and Prevention of Terrorism and Proliferation Financing (NILLTFN).

According to the decision of the 19 June 2019 joint meeting of the Senators of the Criminal Affairs Department of the Senate of the Supreme Court of the Republic of Latvia on the interpretation of legal norms on the prevention of money laundering, it can be established that the general meeting of Senators of the Criminal Affairs Department of the Senate, while discussing the interpretation of the law on preventing money laundering, it was concluded that the obligation of Latvia as a member state of international agreements so as to criminalize the legalization of the proceeds of crime is required by the United Nations Convention against Illicit Traffic in Narcotic and Psychotropic Substances, which entered into force in Latvia on 11 May 1993, the Council of Europe Convention on Proceeds of Crime of November 8, 1990 legalization prevention, search, seizure and confiscation, which entered into force in Latvia on 23 October 1998, the United Nations Convention against Transnational Organized Crime, which entered into force in Latvia on 6 June 2001, the Council of Europe Convention on 16 May 2005 prevention of money laundering and terrorist financing, as well as the search, withdrawal and confiscation of these funds, which entered into force in Latvia on 31 December 2009 and 19 May 2005 as well as the United Nations Anti-Corruption Convention, which entered into force in Latvia on 1 December 2005.

In this way, the Senate admitted in the joint meeting that money laundering is criminalized based on the above-mentioned international legislation. The Senate decided in the general meeting that when trying cases in which a person is accused only of money laundering without a predicate criminal offense, amendments to Article 5 of the NILLTFN Law should be taken into account, which came into force on 1 August 2017. With amendments in all the three clauses of the first part of the article, the word ‘knowing’ was replaced by the word ‘knowingly’, and the legal provision was supplemented with a new part, which further stipulates that even in cases where a person knowingly allowed that the funds were obtained criminally, actions are recognized as legalization of criminally obtained funds; moreover, the general meeting of the Senate decided that legalization of criminally obtained funds is recognized as such, regardless of whether it is established from which criminal offense the funds were obtained.

Also, in this decision of the general meeting, it is indicated that on 1 September 2018, amendments to Section 124 of the Law on Criminal Procedure entered into force, supplementing it with the seventh part, which stipulates that in order to prove the laundering of criminally obtained funds, it must be proven that these funds were criminally obtained, but it is not necessary to prove, in particular, from which crime the funds were obtained; therefore, the Senate acknowledges that the 16 May 2005 Council of Europe Convention on the Prevention of Money Laundering and Financing of Terrorism, as well as the search for these funds, was strengthened with these amendments, withdrawal and confiscation (hereinafter referred to as the Warsaw Convention) requirements provided for in the sixth part of Section 9 (the convention entered into force in the Republic of Latvia on 31 December 2009).

The general meeting of the Senate has especially emphasized that it should be considered that the fifth part of Section 9 of the mentioned convention provides that every member state ensures that a previous or simultaneous conviction for the predicate offense is not a prerequisite for a person to be convicted of money laundering.

Analysing the content of the concept of money laundering, including that in the Warsaw Convention, it can be concluded that money laundering in a generalized sense means the conversion of criminally obtained property for the purpose of creating a false impression of the origin of the property to third parties, thereby hiding or masking the source of origin (Juris, 2012).

Therefore, it can be concluded that the essence of money laundering is to create an appearance for third parties about the legal origin of financial funds or property; moreover, according to the findings indicated in the decision of the 19 June 2019 joint meeting of Senators of the Criminal Affairs Department of the Supreme Court Senate and what is established in the Warsaw Convention, it is not necessary to prove, specifically, from which crime the funds were obtained. Considering that the Senate has especially noted that the Republic of Latvia with these amendments to the legal framework, namely Section 124 of the Law on Criminal Procedure, has strengthened the requirements set out in the third part of Section 9 of the Warsaw Convention, I will now draw attention to what is established in this Convention.

Paragraph 6 of Section 9 of the Warsaw Convention stipulates that each member state ensures that, in accordance with this Section, a person can be convicted of money laundering if it is proven that the property specified in paragraph 1(a) or (b) of this Section has been acquired committing a predicate offense, moreover; in such a case, it is not necessary to prove exactly which crime the acquisition of such property is related to.

On the other hand, the explanatory article of the Warsaw Convention states that Clause 6 refers to the issue of proving the predicate offense of money laundering. In order to facilitate prosecution, the drafters of this convention stated that it is important that money laundering prosecutors not be required to prove all the factual elements of a particular predicate offense when evidence of the criminal origin of the property can be obtained from circumstantial evidence. By clarifying that this paragraph refers to convictions for money laundering under this Section, the drafters of this Convention wished to indicate that this provision should be seen in the context of the definition of money laundering contained in Section 9 and in particular paragraph 1 of its definition, which refers to ‘intentional’ conduct. Therefore, the Parties can implement 9.6. Section, requiring that the author of the criminal offense of money laundering should have been aware that the assets are from the predicate criminal offense, without the need to prove a specific criminal offense.

Moreover, the explanations to the Warsaw Convention clarify that in a stand-alone money laundering charge, prosecutors do not have to establish a specific underlying predicate offense at a specific time and date. Adding that this is important when trying to prosecute certain money laundering offenses by persons who launder money for organized criminals and other third parties. Also, Point 5 deals with another important practical problem related to criminal prosecution in the field of money laundering, which was discovered in assessments in several countries – the need to pass a conviction for the predicate offense as a basis for criminal prosecution for money laundering. This Convention now requires Parties to ensure that a prior or concurrent conviction for the predicate offense is not a prerequisite for a conviction for money laundering. The drafters of this convention believed that, clarifying it in paragraph 5, it should be possible to determine the predicate offense (domestic or foreign) in the prosecution of money laundering based on circumstantial or other evidence. This was considered important by the drafters as the perceived need for such a conviction often hindered the prosecution of money laundering as a ‘stand-alone’ offence, particularly money laundering by third parties on behalf of others.

Confirmation that Section 9, Point 6 of the Warsaw Convention provides that the predicate criminal offense does not have to be established can also be found in the decision of the European Court of Human Rights (ECtHR) dated 1 June 2017, Zschüschen v Belgium case, that is, in the decision of the ECtHR, it is indicated that on 27 June 2006, the Court of Appeal of Antwerp indicated that it is not necessary that a criminal trial be initiated for the predicate offense, it is not necessary that the predicate offense be specifically stated in the indictment, it is not even required that the criminal judge who has to decide on money laundering should know the exact predicate offense if he can rule out any legal (lawful) origin based on factual data.

At the same time, the court also concluded that the absence of the predicate criminal offense in the accusation is not a violation of the right to defence, the description of the accusations mentioned in the summons corresponds to the conditions set in Article 6, Point 3, subparagraph a) of the Warsaw Convention; with this qualification, the accused was informed in detail about the facts against him, in particular he was informed of the place and date of the legalization, as well as of the sum of the exchanged sums and, therefore, of the expected patrimonial advantages.

In its decision rejecting the person's application, the ECtHR states that it has no reason to disagree with the Belgian jurisprudence, which is in line with the Warsaw Convention: ‘The Court saw no reason to disagree with this internal jurisprudence, which seemed to be compatible with the Council of Europe Convention on Money Laundering. According to this convention, it was sufficient that the ‘money launderer’ was aware – or should have been aware – that the relevant assets are criminally obtained funds (Section 9, Point 3), moreover, a conviction for ‘money laundering’ was possible without proving original offense (Section 9, Point 6)’. In addition, the binding directive of the European Parliament and the Council of the Republic of Latvia must also be taken into account, that is, from the considerations of the preamble Point 12 of the European Parliament and Council Directive (EU) 2018/1673 (23 October 2018) on combating money laundering with criminal law, it follows that while combating money laundering through criminal law measures and for them to be effective, conviction should be possible without requiring the precise determination of which criminal activity resulted in the property or requiring a prior or concurrent conviction for said criminal activity, while taking into account all relevant circumstances and evidence. Member States should be able, in accordance with their legal systems, to ensure this by means other than legislation. The fact that the criminal activity was committed in another Member State or in a third country should also not hinder the prosecution of money laundering, provided that the conditions set out in this Directive are met.

Also, in Point 13, it is stated that the purpose of this directive is to establish criminal liability for the legalization of proceeds of crime, if it was done with intent and it was known that the property was obtained through criminal activity. In this connection, this directive should not distinguish between situations where property is obtained directly through criminal activity and situations where it is obtained indirectly through criminal activity, in accordance with the broad definition of ‘criminal proceeds’ in Directive 2014/42/EU of the European Parliament and of the Council. In any case where it is considered whether the property was obtained through criminal activity and whether the person concerned knew it, the circumstances of the case should be taken into account, for example, that the value of the property in question is disproportionate to the legitimate income of the accused person and that the criminal activity and the acquisition of the property occurred in the same period. Intent or awareness of a person can be inferred from objective, factual circumstances. As this Directive provides for minimum rules regarding the definition of criminal offenses and sanctions in the area of money laundering, Member States are free to adopt or maintain stricter criminal law provisions in the said area. Member States should be able, for example, to establish that money laundering that occurred through self-reliance or gross negligence is a criminal offence. References in this Directive to negligent money laundering should also be understood as such by Member States where such conduct is criminalised.

This chapter will consider what is ‘stand alone’ or autonomous money laundering and the aspects related to its proof, which were already paid attention to in the previous chapter, when analysing regulatory acts. In recent years, legal practitioners and theoreticians have paid special attention to autonomous money laundering; although there are a number of criminal proceedings that have been initiated on the issue of autonomous money laundering, judicial practice in this area has not yet strengthened.

As for the specifics of the investigation, it is important to mention that money laundering can be investigated together with the predicate offense or using a ‘stand-alone’ or autonomous approach.

According to the definition of the Financial Action Task Force (FATF), ‘stand-alone’ money laundering refers to the prosecution of money laundering independently, without initiating a criminal prosecution for a predicate offense. According to the FATF methodology, ‘stand-alone’ or autonomous money laundering is applicable to situations where its investigation is carried out autonomously, only according to Section 195 of the Criminal Law, without investigating the predicate criminal offense. Such an investigation may be particularly important in cases where there is insufficient evidence of a specific predicate offense or there is lack of jurisdiction to investigate the predicate offense.

Speaking of ‘stand-alone’ or autonomous money laundering, one cannot fail to mention the 5th round report on the effectiveness of Latvia's money laundering and terrorist financing prevention system approved at the 4 July 2018 plenary session of the Moneyval Committee of the Council of Europe, which was published in 2018 on August 23.

Namely, in the period from 30 September 2017 to 8 October 2017, Latvia was assessed according to international FATF standards by the experts of the Moneyval Committee of the Council of Europe during the visit.

Moneyval experts established that a stable system for preventing and combating money laundering has been established in Latvia, the purpose of which is to prevent the possibility that the financial and non-financial sectors are used in money laundering. However, so far this system has not worked effectively enough.

One of the main shortcomings identified by Moneyval regarding the effectiveness of investigation, criminal prosecution (partially also trial) and regarding the effectiveness of the confiscation system in Latvia was that it also focused on the fact that there are essentially no charges and convictions for the so-called ‘stand-alone’ cases of money laundering, when money laundering is investigated autonomously, only according to Section 195 of the Criminal Law, if the investigation of the predicate offense is difficult or impossible, and it was also established that no effectiveness has been demonstrated in relation to confiscation of undeclared and falsely declared cash at the state border; moreover, the criminal penalties imposed on individuals for money laundering are neither proportionate nor dissuasive, and attention was drawn to the process of lack of means of coercive influence in relation to legal entities.

According to the assessment of Latvia's national risk, as well as the opinions of international experts, the biggest threat and investigative problem is the legalization of criminally obtained funds without a known predicate, as well as proving the criminal origin of the property.

The peculiarity of ‘stand-alone’ cases is that before proving the composition of a criminal offense, it is necessary to establish the criminal origin of the property, because Section 195 of the Criminal Law provides for the responsibility for money laundering.

It is indisputable that the assets obtained by crime are always the result of a criminal offense, but the specificity of the ‘stand-alone’ approach is that the direct origin of the assets is unknown. The criminal origin of the assets is proven mainly by circumstantial evidence, excluding the legal origin of the property, because in ‘stand-alone’ cases, direct evidence of the criminal origin of the property is likely to be difficult or impossible to obtain.

According to Section 124, Part 6 of the Law on Criminal Procedure, the circumstances included in the subject of proof regarding the criminal origin of the property shall be considered proven if, during the course of the proof, there is reason to recognize that the property most likely has a criminal, rather than a legal, origin.

According to the material in ‘Investigating Money Laundering Cases: Securing Evidence in “Stand Alone” Money Laundering Investigation Cases – Circumstantial Evidence and Jurisprudential Analysis Methods in the Netherlands’, the step-by-step plan developed by the Dutch Supreme Court in 2013 allows the successful prosecution of money laundering without evidence of the predicate offense and the charging of persons when the time for indictment of the predicate offense has expired. As stated in Dutch jurisprudence, stand-alone money-laundering cases can now be investigated not only with a more successful outcome, but also more efficiently. At the same time, basic (human) rights are preserved, such as the right to remain silent, the right not to testify against oneself and also the presumption of innocence.

Using this method of proof, indirect evidence excludes the possibility of the legal origin of the funds and ensures that no other situation is possible than that the property (funds) was directly or indirectly obtained as a result of the commission of any criminal offense provided for in the Criminal Law.

In ‘stand-alone’ money laundering investigations, the goal is to find out the truth about a criminal offense related to money laundering and the offenders, in the absence of direct evidence of an underlying source of criminal origin for these funds. The investigation of a possible predicate offense as such is not the purpose of a stand-alone money laundering investigation case.

Here, it should also be taken into account what is recognized in the doctrine, that the division of evidence into direct and indirect evidence depends on the applicability of its content to the circumstances that can be proven in criminal proceedings. Evidence is direct if its use means direct, direct proof of the circumstance to be proven in the criminal process, but indirect evidence proves the facts to be proven in the criminal process only indirectly, i.e. through related facts (Strada-Rozenberga, 2019).

The question of the use of circumstantial evidence in proof has recently been frequently raised, especially in the context of the ability (skill) of responsible officials to use circumstantial evidence to prove money laundering.

According to FATF standards, circumstantial evidence is essential to establish the criminal origin of property and the intent of a person's actions.

Proving by circumstantial evidence is more complicated than proving by direct evidence. An integral requirement for circumstantial evidence is that it must prove several facts that are logically connected to each other and to circumstances that can be proven in criminal proceedings. Indirect evidence can only be seen in their context because each individual indirect evidence does not have the appropriate cover ‘probative force’ (Strada, 2002).

Therefore, it is not necessary to prove a predicate criminal offense; it is enough to prove that the object was obtained because of any criminal offense. This means that if the object does not originate from a known legal source, it must be related to a criminal source. This indirect method of proof can be used in cases where there are no direct indications of the predicate offense.

When evaluating a person's actual actions, the analysis of the economic logic of the transactions is also of fundamental importance, that is, whether the transactions executed by the person are economically justified at all or whether they were executed only to create appearances (fictitious transactions). On the other hand, in the case of an apparent or fictitious transaction, the will is expressed only by appearance, then it does not have any legal consequences, except in cases of unlawful deception of a third party (Section 1438 of the Civil Code).

The circumstantial method of proof involves ruling out a legitimate source of origin and arriving at the conclusion and belief that no other situation is possible than that the object was obtained because of any crime.

The exclusion method is tied to the money follows principle, that is, no obvious connection to the object can be established from known legitimate sources.

Prosecutors do not have to prove that the property in question is the benefit of a specific or specific criminal act, as such an interpretation would limit the operation of legal acts (the Warsaw Convention or the Criminal Law). At a minimum, the prosecution must be able to provide sufficient circumstantial or other evidence to conclude to the required criminal standard that the property in question is of criminal origin.

Regarding the defence position often used in practice by representatives of the bar of the Republic of Latvia, stating that the origin of the funds has not been ascertained, therefore they are illegal, but not criminal, I can agree that a person can have either legal or illegal funds. It should be taken into account here that illegal funds can include both funds obtained as a result of an administrative violation and funds obtained as a result of a criminal offense; therefore, when evaluating whether the funds have been obtained criminally, the amount of funds must be taken into account, that is, if it exceeds the amount of the law ‘On the Criminal Law entry into force and application procedure’ of the amount determined in Section 20, by which they are recognized as large, then there is no doubt that the person could have obtained the funds exclusively through criminal means. In this way, it can be excluded that the funds were obtained as a result of committing an administrative violation. In practice, proving the criminal origin of the funds, to a large extent, could cause problems, because in such cases there is still a possibility that they were obtained as a result of committing an administrative violation, therefore, with the set of indirect evidence, it should be possible to exclude reasonable doubts that the funds could have been obtained as a result of an administrative violation.

However, proof beyond a reasonable doubt does not mean proof beyond the shadow of a doubt (Strada-Rozenberga, 2002).

And the criminal origin (not the criminal offense as a result of which the property was obtained) is proven by ruling out any possibility that the property was obtained legally, so it can be concluded that the only plausible explanation for the origin of the property is criminal origin.

Confirmation that Section 9, Part 6 of the Warsaw Convention provides that the predicate criminal offense does not have to be established and can also be found in the decision of the ECtHR dated 1 June 2017, Zschüschen v Belgium case, that is, in the decision of the ECtHR, it is indicated that on 27 June 2006, the Court of Appeal of Antwerp indicated that it is not necessary that a criminal trial be initiated for the predicate offense, it is not necessary that the predicate offense be specifically stated in the indictment, it is not even required that the criminal judge who has to decide on money laundering should know the exact predicate offense if he can rule out any legal (lawful) origin based on factual data.

At the same time, the court also concluded that the absence of the predicate criminal offense in the accusation is not a violation of the right to defence, the description of the accusations mentioned in the summons corresponds to the conditions set in Section 6, Part 3, subparagraph a) of the Warsaw Convention; with this qualification, the accused was informed in detail about the facts against him, in particular he was informed of the place and date of the legalization, as well as of the sum of the exchanged sums and, therefore, of the expected patrimonial advantages.

In its decision, rejecting the person's submission, the ECtHR states that it has no reason to disagree with the Belgian jurisprudence, which is in line with the Warsaw Convention: ‘The Court saw no reason to disagree with this domestic jurisprudence, which seemed to be compatible with the Council of Europe Convention on Money Laundering. According to this convention, it was sufficient that the ‘money launderer’ was aware – or should have been aware – that the assets in question were criminally obtained funds (Section 9, Part 3), moreover, a conviction for ‘money laundering’ was possible without proving the original offense (Section 9, Part 6)’.

Credit institutions have historically been and continue to be important money laundering intermediaries, as they are the main means of transferring and using money around the world. For this reason, the financial system is the focal point of anti-money laundering (AML) initiatives, as dirty money is most visible when it first enters the financial system. Credit institutions are walking on thin ice without AML precautions.

When creating AML policies, credit institutions are based on three important rules: identity checks, due diligence and monitoring of AML transactions. Know Your Client (KYC) is the initial step in any AML program and is mandatory for banks to flag suspicious transactions. KYC is the process of verifying the identity of a person who wants to access your services. A robust KYC process makes it easy to verify customer data and allows you to accurately determine whether your customers are who they say they are. This procedure is carried out using various means such as identification documents, facial recognition, fingerprint scanning and financial statements. Overall, optimizing your customer verification processes will keep you compliant with the law while protecting all your company's stakeholders.

AML transaction monitoring is also particularly important, meaning bank analysts must monitor transactions daily and integrate data from multiple sources to identify high-risk transactions with suspicious behaviour. AML officers need to know how to spot potential risks.

However, the question arises here as to how to directly prove the involvement of a credit institution in money laundering, without classical methods, that is, without information about the facts obtained as a result of investigative activities, special investigative activities or criminal intelligence.

Evaluating the legal framework in the Republic of Latvia, it can be concluded that the NILLTFN Law, as well as the Financial and Capital Trade Commission (FCTC) Regulation No. 5 of 12 January 2021 ‘Creation and information of customer research, customer in-depth research and numerical risk assessment system the regulatory provisions of technology requirements’ currently determine the minimum requirements for customer research in the field of NILLTFN, while each credit institution is obliged to create an internal control system and in its internal regulatory acts to determine the detailed procedure by which it ensures the fulfilment of the requirements of the mentioned external regulatory acts in the field of NILLTFN; therefore, this could also be the ‘key’ to establish the credit institution's involvement in money laundering.

In practice, a series of actions can be observed, which indicate a special ‘benevolence’ of credit institutions in relation to individual clients, which I will draw attention to in the following. In practice, it often comes to the conclusion that credit institutions do not verify the true beneficiaries before opening an account, although Section 18 of the NILLTFN Law stipulates the obligation for the credit institution to determine the true beneficiary upon receiving a statement signed by the customer, using information or documents from information systems, or by the credit institution itself ascertaining the true beneficiary in cases where information about it cannot be obtained otherwise. When determining the true beneficiary, the credit institution must obtain the name, surname, personal identification number for the resident, and the name, surname, date of birth, number, and date of issue of the identity document, country and institution that issued the document for the non-resident. In fact, the credit institution's obligation to find out information about the true beneficiary (obtain a statement signed by the client with the above-mentioned information) follows from the mentioned legal norm.

Similarly, situations can be observed in practice when opening accounts in credit institutions based on copies of documents, although the first part of Section 12 of the NILLTFN Law states that the natural person is identified by checking his identity according to the client's identity document, while the first part of Section 13 states that the legal status of the person is identified by requesting the presentation of documents confirming the establishment or legal registration of the legal entity, information about the client's legal address, as well as by identifying the persons who are entitled to represent the legal entity in relations with the credit institution and obtaining a document or a copy of the relevant document confirming their right to represent legal entity. The second part of Section 13 of the NILLTFN Law states that a credit institution can identify a legal entity by obtaining the above-mentioned information from a publicly available, reliable and independent source. On the other hand, the first part of Section 14 of the NILLTFN Law requires the credit institution to make copies of the documents on the basis of which customer identification was made.

In addition, in order for the credit institution to recognize the legal entity's registration documents, they must be duly legalized or certified with an apostille in accordance with the Hague Convention of 5 October 1961, on the abolition of legalization requirements for foreign public documents.

It follows from the mentioned norms that credit institutions must perform customer identification based on original documents (or, for legal entities, also – by obtaining information from a publicly available, reliable and independent source), accordingly ensuring the production and storage of copies of these documents. Credit institutions are not entitled to identify customers and open an account based on copies of documents made by another person without seeing legalized or apostille-certified documents.

In practice, there are also situations where in some cases account opening and servicing is allowed on the basis of clearly forged documents, which are detected by the employees of the credit institution, but do not react to it. It is understood that opening and servicing accounts on the basis of forged documents is not permissible. In addition, Section 31.4 of the NILLTFN Law stipulates that credit institutions are obliged to report suspicious transactions to the FIU. Since the external regulatory enactments do not determine the signs of suspicious transactions, the credit institution is obliged to create an internal control system to determine the signs of suspicious transactions in its internal regulatory enactments and the procedure for detecting and reporting these signs to the FIU. In order to conclude whether the credit institution has not violated the requirements of the regulatory enactments regarding the obligation to report suspicious transactions, it is necessary to establish whether the credit institution's internal regulatory enactments did not specify a sign that a fake document was used in the transaction as one of the signs of a suspicious transaction, and upon establishing the said fact, the credit institution did not have obligation to report it to the FIU.

Cases can also be found in practice when credit institutions open accounts, despite the fact that the private banker expressed the opinion that the account should not be opened. It should be said that the NILLTFN Law defines the minimum customer identification and research requirements that credit institutions had to ensure in order to be able to establish business relations with the customer, while the detailed process by which credit institutions ensure the opening of a customer account and which persons are entitled to make the relevant decisions must be determined by each credit institution on its own in internal regulations. Therefore, in order to conclude whether the opening of an account contrary to the opinion expressed by the private banker is considered a violation of the internal regulatory acts of the credit institution, it is necessary to assess the relevant internal regulatory acts of the credit institution, which determine the procedure for opening customer accounts and which were in force at the time of the relevant decision to open an account for the customer. The basis for refusing to open an account at a credit institution is often based on the fact that the documents requested by the credit institution have not been submitted; however, in practice, it is also observed that credit institutions have shown special ‘favour’ to certain customers by opening accounts on the basis of incomplete documents, obtaining additional necessary documents later; already after activating accounts, in addition, credit institutions accept copies of documents, including contracts, which have signatures of only one party, signatures are visually different, copies are of poor quality, etc. Sections 12 and 13 of the NILLTFN Law determine the number of documents and information that credit institutions must obtain before opening an account by performing customer identification. If the mentioned information and documents are not obtained, then the credit institution has violated these requirements. Although the external regulatory enactments do not specify the requirements for the presentation of the documents obtained in the course of customer research, in order for the credit institution to be able to ensure the requirements of Section 20, Part 1, Clause 2 of the NILLTFN Law, which stipulates that the credit institution must carry out constant monitoring of transactions to make sure that the transactions are not considered unusual and suspicious, enforceable, obtainable documents substantiating customer transactions must be such as to give the credit institution a clear picture of the economic and legal validity of the transactions made by its customers. On the other hand, incompletely executed documents (visually different signatures, the documents have only one party's signature, etc.) indicate a possible forgery of these documents and therefore also raise doubts about the economic and legal validity of the transactions they support. The credit institution must determine the requirements in its internal regulatory acts, including language requirements that the documents received from the customer must meet, so that the credit institution can evaluate the compliance of the customer's transactions with the specifics of their operation and make sure that the transactions are economically and legally justified and cannot be evaluated as suspicious. Although external regulatory enactments do not regulate the procedure for obtaining information and documents about transactions from customers, this process must be determined in the internal regulatory enactments of the credit institution. Pursuant to Section 23 of the NILLTFN Law, a credit institution has the right to authorize other persons to perform customer identification, for example, employees of another credit institution; however, this circumstance should also be taken into account and during the investigation, it should be clarified what was the basis for authorizing someone else to perform customer identification.

In practice, it can also be observed that credit institutions often request documents certifying transactions later, sometimes even several months after the transfers, only when inspections begin in credit institutions. According to the requirements of the NILLTFN Law, the documents necessary for the identification of the client must be obtained before the establishment of the business relationship, while during the business relationship, these documents need to be updated, for example, if the power of attorney or identity document has expired; therefore, the failure to obtain such documents from the client may indicate that that the credit institution has had a malicious interest in cooperation with the client. Point 2 of the first part of Section 20 of the NILLTFN Law determines the obligation of the credit institution to carry out constant monitoring of its customers transactions. In addition to that, FCTC regulations No. 5 ‘Regulatory provisions for the establishment of customer research, customer in-depth research and numerical risk assessment system and information technology requirements' determine the criteria upon which the in-depth customer research should be carried out and the amount of information and documents to be obtained during the in-depth research. Therefore, credit institutions can obtain documents certifying transactions both during the ongoing monitoring of transactions and in a later period of time after the execution of the transaction, when conducting an in-depth investigation of the customer, when the prerequisites for the in-depth investigation are established. In order to conclude whether the credit institution has violated the requirements of regulatory acts regarding the acquisition of documents, each case must be evaluated separately, for example, whether it was necessary to request the document as part of the ongoing monitoring of the transaction, or, for example, as part of an in-depth investigation, and what were the requirements set out in the internal regulatory acts of the credit institution regarding to when this document should have been requested and obtained.

Also, the first part of Section 10 of the NILLTFN Law determines the obligation of credit institutions to determine a structural unit or to appoint one or more employees who are entitled to make decisions and are directly responsible for complying with the requirements of the aforementioned laws. In addition, the second part of Section 10 of the NILLTFN Law requires the credit institution to also appoint a board member who is responsible for the NILLTFN in the credit institution. In order to conclude which officials/employees of the credit institution are responsible for complying with specific requirements of the NILLTFN, it is necessary to evaluate the duties specified in the job descriptions of these persons in connection with the requirements of the internal regulatory acts of the credit institution. In practice, it can be established that, despite the fact that customers do not submit all requested documents to credit institutions, cooperation with them is not interrupted, despite the fact that the responsible officials/employees of the credit institution have also been informed about it. On 13 August 2008, the NILLTFN Law entered into force, the second part of Section 28 of which determines if the credit institution does not obtain the true information and documents necessary to fulfil the requirements of NILLTFN Law (for customer identification and research) in the amount that allows it to carry out an inspection in essence, credit institutions terminate the transaction relationship with the client and demand early fulfilment of the client's obligations.

In accordance with the above, the very fact that the credit institution does not obtain the true information and documents necessary to fulfil the requirements of NILLTFN Law (identification and research of the client) can already indirectly indicate that the credit institution is involved in money laundering.

Credit institutions often deny any connection with the legalization of criminally obtained funds although the actions of credit institutions in cooperation with customers who launder money through accounts opened in these credit institutions indicate the opposite.