A case initiated with regard to Regulation by the Bank of Latvia on buying and selling foreign currency cash
On 16 April 2015 the 1st Panel of the Constitutional Court initiated case “On Compliance of Para 19 and Para 20 of the Bank of Latvia Regulation No. 141 of 15 September 2014 “Requirements regarding prevention of money laundering and financing of terrorism in buying and selling foreign currency cash” with Article 1 and Article 64, as well as the first sentence in Article 91 of the Satversme of the Republic of Latvia.”
The Contested Norms
The contested norms provide:
„19. If the transaction is not unusual or suspicious and business relations are not initiated, but the sum of the transaction is equal to 2 000 – 7 999.99 euro, the capital company shall identify the client or the true beneficiary as follows:
19.1. shall make copies of the client’s identity documents;
19.2. shall verify, whether a client’s identity documents are authentic and valid;
19.3. shall immediately inform a competent law enforcement institution, if substantiated doubts arise regarding forgery of the submitted identity document.
20. If the total sum of transactions conducted by one client referred to in Para 19 within one month reaches the sum referred to in Sub-paragraph 13.1 of this Regulation (8000 euro or more), the capital company shall identify this client in accordance with the procedure referred to in Para 18 of this Regulation (which envisages more complicated procedure).”
The Norms of Higher Legal Force
Article 1 of the Satversme: “Latvia is an independent democratic republic.””
Article 64 of the Satversme: “The Saeima, and also the people, have the right to legislate, in accordance with the procedures, and to the extent, provided for by this Constitution.”
The first sentence in Article 91 of the Satversme: “All human beings in Latvia shall be equal before the law and the courts.”
The Facts
The constitutional complaint was submitted by limited liability company “TAVEX”, which conducts commercial activities, inter alia, in the field of buying and selling foreign currency cash. The applicant notes that, in conducting transactions in the scope referred to in the contested norms, the client or the true beneficiary should be identified. Whereas credit institutions, which also conduct such transactions, do not have the obligation to identify the client. Thus, it is alleged that the contested norms violate the principle of equality. The norms create a situation, where the potential clients, who at the moment of conducting the transaction do not have with them identity documents or who do not want to be identified, go to a credit institution, which does not identify clients in cases set out by the contested norm.
The applicant holds that the contested norms are incompatible with Article 64 of the Satversme and the principle of division of power, which follows from Article 1 of the Satversme, since the Bank of Latvia does not have the right to adopt external regulatory enactments.
Legal Proceedings
The Constitutional Court has requested the Bank of Latvia to submit a written reply on the facts of the case and legal substantiation by 16 June 2015.
The term for preparing the case is 16 September 2015. The Court shall decide upon the type of procedure and the date for hearing the case after the case has been prepared.
Linked case: 2015-11-01