Judgment;Summary — ECLI:EU:C:2022:883
Date: 2022-11-17
Language of the case: Latvian
Court formation: First Chamber
Subject matter: Approximation of laws
Procedure: Reference for a preliminary ruling
Origin: Latvia

Summary C-562/20-1 
Case C-562/20 
Summary of the request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice 
Date lodged: 
28 October 2020 
Referring court: 
Administratīvā rajona tiesa (District Administrative Court, Latvia) 
Date of the decision to refer: 
12 October 2020 
Applicant: 
SIA Rodl & Partner 
Defendant: 
Valsts ieņēmumu dienests (State Tax Administration, Latvia) 
  
Subject matter of the main proceedings 
Claim that the court should i) annul the decision of the State Tax Administration 
(‘the defendant’) imposing on the applicant a sanction for the incorrect risk 
assessment which the latter carried out, in accordance with the Noziedzīgi iegūtu 
līdzekļu legalizācijas un terorisma un proliferācijas finansēšanas novēršanas 
likums (Law on the Prevention of Money Laundering, Terrorist Financing and 
Nuclear proliferation), with respect to its customers, and ii) order the defendant to 
withdraw the information published on its website in relation to the application of 
that sanction. 
Subject matter and legal basis of the request for a preliminary ruling 
In accordance with Article 267 TFEU, the referring court asks the Court of Justice 
to interpret Article 18 of 2015/849, as well as Annex III, point 3(b), to, and 
Article 13(1)(c) and (d), Article 14(5) and Article 60(1) and (2) of, that directive, 
with a view to clarifying in which cases enhanced customer due diligence 
measures must be taken, how information on the customer’s activities is to be 
EN 
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obtained and how information on the sanctions applied to obliged entities is to be 
published. 
Questions referred for a preliminary ruling 
1. Must Article 18(1) and (3) of Directive 2015/849, in conjunction with 
Annex III, point 3(b), thereto, be interpreted as meaning that those 
provisions i) automatically require a provider of external bookkeeping 
services to take enhanced customer due diligence measures on the ground 
that the customer is a non-governmental organisation and the person 
authorised and employed by the customer is a national of a high-corruption-
risk third country, in the present case, the Russian Federation, who holds a 
Latvian residence permit, and ii) automatically require that customer to be 
categorised as representing a higher degree of risk? 
2. If the preceding question is answered in the affirmative, can the 
abovementioned interpretation of Article 18(1) and (3) of Directive 
2015/849 be regarded as proportionate and, therefore consistent with the 
first subparagraph of Article 5(4) of the Treaty on European Union? 
3. Must Article 18 of Directive 2015/849, in conjunction with Annex III, 
point 3(b), thereto, be interpreted as meaning that it lays down an automatic 
obligation to take enhanced customer due diligence measures in every case 
where one of the customer’s business partners, but not the customer itself, is 
in some way linked to a high-corruption-risk third country, in the present 
case, the Russian Federation? 
4. Must Article 13(1)(c) and (d) of Directive 2015/849 be interpreted as 
meaning that, when taking customer due diligence measures, the obliged 
entity must obtain from the customer a copy of the contract concluded 
between that customer and a third party, and, therefore, that an examination 
of that contract in situ is considered to be insufficient? 
5. Must Article 14(5) of Directive 2015/849 be interpreted as meaning that the 
obliged entity is required to apply due diligence measures to existing 
commercial customers even where there is no indication of any significant 
changes in the customer’s circumstances and the time limit laid down by the 
competent authority of the Member State for the adoption of new monitoring 
measures has not expired, and that that obligation is applicable only in 
relation to customers that have been categorised as representing a high risk? 
6. Must Article 60(1) and (2) of Directive 2015/849 be interpreted as meaning 
that, when publishing information on a decision imposing an administrative 
sanction or measure for breach of the national provisions transposing that 
directive against which there is no appeal, the competent authority has an 
obligation to ensure that the information published conforms exactly to the 
information contained in that decision? 
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EU legal framework 
Treaty on European Union, first subparagraph of Article 5(4). 
Directive (EU) 2015/849 of the European Parliament and of the Council of 
20 May 2015 on the prevention of the use of the financial system for the purposes 
of money laundering or terrorist financing, amending Regulation (EU) 
No 648/2012 of the European Parliament and of the Council, and repealing 
Directive 2005/60/EC of the European Parliament and of the Council and 
Commission Directive 2006/70/EC: Article 13(1)(c) and (d), Article 14(1) and (5), 
Article 18, Article 60(1) and (2) and Annex III. 
Provisions of national law relied on  
Law on the Prevention of Money Laundering, Terrorist Financing and Nuclear 
Proliferation: Article 6(1)(11) and (12), Article 7(1), points 5, 7 and 11, 
Article 8(2), Article 11(1), points 1 and 2, Article 111(1) and (3), point 2(a), (b) 
and (c), Article 20(1) and (2), Article 22(2), point 5, and Article 46(12) and (13). 
Case-law of the Court of Justice 
Judgment of the Court of Justice of 25 April 2013, Asociaţia Accept, C-81/12, 
EU:C:213:275, paragraph 71 
Judgment of the Court of Justice of 10 March 2016, Safe Interenvíos, C-235/14, 
EU:C:2016:154, paragraphs 77, 87 and 107 
Brief summary of the facts and the main proceedings 
1 The applicant is a commercial company, registered in the Republic of Latvia, 
whose business is to provide services in the fields of accounting, bookkeeping, 
auditing and tax consultancy. In accordance with Article 3(1), point 3, of the Law 
on the Prevention of Money Laundering, Terrorist Financing and Nuclear 
Proliferation (‘the Law on Prevention’), the applicant is subject to that Law. 
2 Between 3 April and 6 June 2019, the defendant’s staff carried out an anti-money-
laundering inspection of the applicant, on the basis of which an initial inspection 
report was drawn up on 3 April 2019 (a further report followed on 6 June 2019). 
3 The initial inspection report states that the applicant’s internal monitoring system 
had a number of shortcomings and that the applicant had not carried out and 
documented an assessment of the risk of money laundering and terrorist financing 
associated with its economic activities, in accordance with Article 6(1) of the Law 
on Prevention. In particular, there was some dispute in that regard over the risk 
assessment of some of the applicant’s customers: one particular foundation (‘the 
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Foundation’) and one particular commercial company (‘the Commercial 
Company’). 
4 The abovementioned Foundation is established in the Republic of Latvia and its 
purpose is to popularise and promote the information technology sector in 
education. 
5 The Foundation first became a customer of the applicant on 25 October 2016. The 
document identifying the customer was signed on 7 March 2017 by a natural 
person authorised by the Foundation (a national of the Russian Federation) who is 
at the same time the head (and an employee) of the Foundation. The whole of 
Latvian society is designated as being the beneficial owner of the Foundation (a 
fact which is contrary to the legislation in force). 
6 The applicant assessed the customer’s risk as low. The defendant has stated that, 
according to information from the Noziedzīgi iegūtu līdzekļu legalizācijas 
novēršanas dienests (Money Laundering Prevention Service), the main threats of 
terrorist financing lay in the possible use of NGOs and the business community to 
finance terrorism, and that international practice and the experience of law 
enforcement agencies in several countries showed that NGOs were particularly 
vulnerable and liable to being misused to finance terrorism. Consequently, 
according to the defendant, the applicant, being subject to the Law on Prevention, 
has an obligation to carry out a detailed examination of the customer if there is an 
increased risk assessment, given that the applicant’s customer has links with the 
Russian Federation (high-corruption-risk third country). 
7 The Commercial Company is also established in the Republic of Latvia and its 
business is in the area of public relations and communication. 
8 The Commercial Company first became a customer of the applicant on 
28 December 2017. The Commercial Company’s sole business partner and sole 
beneficial owner is a Latvian national. 
9 The applicant assessed the risk associated with the Commercial Company as low. 
On analysing extracts from the Commercial Company’s current account, the 
defendant found that that company received monthly transfers of EUR 25 000 
from Nord Stream A2 AG, an undertaking established in Switzerland which is a 
subsidiary of the Russian undertaking Gazprom (Gazprom holds 51% of the 
former undertaking’s share capital). Furthermore, the invoices issued show that 
these were issued in accordance with the contract signed on 1 January 2018 
between the Commercial Company and Nord Stream 2 AG. The defendant asked 
the applicant to produce a copy of that contract, but the applicant did not provide 
it, stating that it had examined the original of the contract in situ at the customer’s 
premises. In the light of the foregoing, the defendant concluded that, in carrying 
out its monitoring of the business relationship, the applicant had not paid 
particular attention to the transactions concluded by its customer (the Commercial 
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Company) with Nord Stream 2 AG, which is an undertaking that belongs to an 
entity established in a high-corruption-risk third country. 
10 By the time the follow-up to the inspection report was drafted (on 6 June 2019), 
the shortcomings in the monitoring system had been remedied and, for that reason, 
no breaches were found to have been committed. 
11 By decision of 11 July 2019 of the Director of the Anti-Money Laundering 
Administration, a pecuniary fine of EUR 3 000 was imposed on the applicant for 
the breach of the requirements laid down in the Law on Prevention which had 
been found during the inspection. 
12 On the basis of that decision, the defendant, on 11 August 2019, published on its 
website information on the breaches of the requirements laid down in the Law on 
the Prevention which the applicant was alleged to have committed. 
13 The abovementioned decision of 11 July 2019 was contested by the applicant but 
was confirmed by decision of 13 November 2019 of the applicant’s Director-
General (‘the contested decision’). 
14 On 13 December 2019, the applicant asked the referring court to annul the 
contested decision and to impose on the defendant an obligation to withdraw the 
information published on its website in relation to the sanctions imposed on the 
applicant as being subject to the Law on Prevention. 
Essential arguments of the parties to the main proceedings 
15 The essential arguments of the parties to the main proceedings are included in the 
grounds set out by the referring court. 
Brief summary of the grounds for the request for a preliminary ruling 
Obligation to take enhanced customer due diligence measures even in the case 
where the customer’s form, structure and activity are not indicative of a risk 
16 Article 18(1) of Directive 2015/849 provides that the Member States may 
determine other ‘cases of higher risk’ in which ‘enhanced customer due diligence 
measures’ must be taken. 
17 The referring court has doubts as to whether any non-governmental organisation 
should be regarded as a case of higher risk and, for that reason, be subject to 
enhanced due diligence criteria. Neither Directive 2015/849 nor the Law on 
Prevention provide that, because of their legal form, non-governmental 
organisations must be regarded in themselves as higher-risk cases. According to 
the applicant, if the defendant, as a national monitoring authority, considers that, 
in every case where the obliged entity’s customer is a non-governmental 
organisation or one of the customer’s employees comes from a high-corruption-
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risk third country, the customer must be the subject of a detailed examination, the 
question arises as to whether that requirement is excessive or whether it is 
proportionate and, if so, whether this should be expressly laid down in law. 
18 In the present case, it is common ground that the Russian Federation is not a high-
risk country, which is to say that it is not included in the list of high-risk countries 
published by the Financial Action Task Force (FATF) or in the European 
Commission’s list of third countries not doing enough to combat money 
laundering and terrorist financing, although the view might be taken, in 
accordance with Annex III, point 3(b), to Directive 2015/849 and Article 111(3), 
point 2(b), of the Law on Prevention, that it is a country in which there is a high 
risk of corruption. Nonetheless, the provisions of the Law on Prevention and of 
Directive 2015/849 do not directly require the customer to be subjected to 
enhanced due diligence measures in the case where a national of the Russian 
Federation is merely an employee of the customer, which is to say not the 
beneficial or actual owner of that customer for the purposes of Directive 
2015/849. 
19 Recital 4 of Directive 2015/849 states that Union action should continue to take 
particular account of the FATF Recommendations and instruments. Paragraph 71 
of the ‘FATF Guidance for a Risk-Based Approach for the Accounting 
Profession’ (‘the FATF Guidance’) sets out a number of criteria whereby a 
customer may be a higher risk on account of its geographical location. 
Nonetheless, none of those criteria has to do with the nationality of one of the 
customer’s employees. The applicant takes the view that any conclusion drawn, 
with respect to the potentially higher risk represented by the Foundation, on the 
basis of the nationality of a person who is employed and has been authorised by 
that customer is incompatible with the FAT Guidance. 
20 The case-law of the Court of Justice states that Member States must ensure that 
the enhanced customer due diligence measures capable of being applied are based 
on assessment of the existence and level of a risk of money laundering or terrorist 
financing with respect to a customer, business relationship, account, product or 
transaction, as the case may be. Without such assessment, it is not possible for 
either the Member State concerned or, as the case may be, an institution or person 
covered by [Directive 2015/849] to decide in an individual case what measures to 
apply. Finally, where there is no risk of money laundering or terrorist financing, it 
is not possible to take preventive action on those grounds (judgment in Safe 
Interenvíos, paragraph 107). The Court has also stated in that regard that such 
measures must have a concrete link with the risk of money laundering and 
terrorist financing and be proportionate to that risk (judgment in Safe Interenvíos, 
paragraph 87). Consequently, if such a risk cannot be identified, it would be 
inappropriate and disproportionate always to require enhanced due diligence. 
21 The principle of proportionality laid down in Article 5 of the Treaty on European 
Union applies both to EU law and to domestic law in situations in which Member 
States exercise their discretion and competence in areas of EU law which have 
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been harmonised by the European Union (including the area governed by 
Directive 2015/849). As the Court has held, the criterion of proportionality is 
essential in connection with additional measures introduced by Member States in 
order to prevent money laundering and terrorist financing. The formal requirement 
always to classify any non-governmental organisation as a high-risk customer may 
not be proportionate to the objective, because the benefit to society does not 
outweigh the harm caused to the rights and legitimate interests of the person 
concerned. 
22 In accordance with the case-law of the Court of Justice, where national law is 
applied and a situation falls within the scope of a directive, national law must be 
interpreted as far as possible in the light of the wording and the purpose of the 
directive (judgment in Asociaţia Accept, paragraph 71). In the present case, there 
are doubts about the interpretation of Article 18(1) and (3) of Directive 2015/849, 
in conjunction with Annex III, point 3(b) thereto, and, in particular, about whether 
that provision envisages an automatic obligation to take enhanced customer due 
diligence measures if there is any indication of a risk associated with the 
customer’s legal form (if it is a non-governmental organisation) or a risk 
associated with the customer’s economic activities (if the person authorised and 
employed by the customer is a national of a high-corruption-risk third country, in 
the present case, the Russian Federation, who holds a Latvian residence permit), 
and about whether that provision prescribes that such a customer is always to be 
categorised as representing a higher degree of risk. What is more, if that 
conclusion were reached with respect to the interpretation of the relevant 
provisions of Directive 2015/849, it would fall to be assessed whether such a 
requirement must be considered to be proportionate. 
Adoption of enhanced customer due diligence measures if one of the customer’s 
business partners has links with a high-corruption-risk third country, in the 
present case, the Russian Federation 
23 The fact that the customer itself or its beneficial owner is established in the 
Russian Federation ― which is not a high-risk country but might be assessed as 
being a country or territory in which there is a high risk of corruption ― might be 
a factor that increases the risk associated with the customer, which might in turn 
be a reason for subjecting the customer to a detailed examination. 
24 In the view of the defendant, the fact that Nord Stream 2 AG, which is (51%) 
owned by the Russian undertaking, Gazprom, is a business partner of the 
Commercial Company is a factor which increases the risk associated with the 
customer. What is more, the fact that the Commercial Company receives 
EUR 25 000 a month from Nord Stream 2 AG might indicate that those entities 
are engaged in a transaction, atypical in its scale and complexity, which does not 
appear to have any apparent economic or legal purpose.  
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25 Consequently, the defendant considers, the applicant infringed Article 20(1), 
points 1 and 2, and Article 22(2), point 5, of the Law on Prevention, which 
correspond to Article 13(1)(c)and (d) and Article 18(1) of Directive 2015/849. 
26 Article 5 of Directive 2015/849 provides that, within the limits laid down by EU 
law, Member States may adopt or retain in force stricter provisions in the field 
covered by that directive to prevent money laundering and terrorist financing. The 
Court of Justice has stated in its case-law that the ‘stricter provisions’ referred to 
in Article 5 of Directive 2015/849 may concern situations for which the directive 
prescribes certain types of customer due diligence and also other situations which 
Member States consider to represent a risk. Consequently, the Republic of Latvia 
may also adopt stricter measures to prevent money laundering and terrorist 
financing if it considers there to be a risk. The referring court nonetheless has 
doubts about whether, in this particular case, the defendant, when applying the 
provisions of the Law on Prevention, went beyond what is required by law in 
taking the view, in particular, that the fact that one of the Commercial Company’s 
business partners is a subsidiary of an undertaking established in the Russian 
Federation is in itself a factor which increases the risk associated with the 
customer, even if that presumption is not provided for either in the Law on 
Prevention or in Directive 2015/849. 
27 Article 13(1) of Directive 2015/849 sets out the customer due diligence measures, 
which include, in points (c) and (d), assessing and, as appropriate, obtaining 
information on the purpose and intended nature of the business relationship, as 
well as conducting ongoing monitoring of the business relationship. Nonetheless, 
that provision of the Directive does not specify the methods and means of 
assessing and obtaining such information. 
28 It should be noted that the provisions of the Law on Prevention, in common with 
Article 13(1) of Directive 2015/849, do not require copies of transactional 
documents to be obtained, in particular where the transaction does not exhibit any 
unusual features or there is no indication of any increased risk associated with the 
customer. Consequently, the referring court has doubts about whether the 
defendant exceeded its statutory powers in requiring the production of a copy of 
the contract concluded between the Commercial Company and Nord Stream 2 
AG. 
29 In the light of the foregoing, it must be clarified whether the provisions of 
Directive 2015/849 state that, in the event that one of the customer’s business 
partners has links with a high-corruption-risk third country, in the present case, the 
Russian Federation, enhanced customer due diligence measures must be taken, 
and whether those provisions require the production of a copy of the contract 
concluded between the customer and the third country and, therefore, whether an 
examination of that contract in situ is considered to be insufficient. 
Updating of information on the customer 
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30 Article 14(5) of Directive 2015/849 states that the obligation to update 
information on the customer is to apply ‘on a risk-sensitive basis’. In other words, 
if the customer is low-risk and the customer’s circumstances have not changed 
significantly, Article 14(5) of Directive 2015/849 does not require customer due 
diligence measures to be taken. Given that, in the view of the defendant, the 
applicant infringed Article 8(2) of the Law on Prevention, which provides that a 
person subject to that Law must periodically update information on the customer 
and, in any event, at least once every 18 months, and given that, at the time when 
the events of the present case occurred, that is to say when the defendant 
undertook its inspection of the applicant, 18 months had not yet passed since the 
Commercial Company first became a customer of the applicant, it must be 
clarified whether the provisions of Directive 2015/849 state – and, if so, whether 
this is justified and proportionate – that the obliged entity must apply due 
diligence measures to existing customers even in a situation in which there is no 
indication of any significant changes in the customer’s circumstances, and 
whether that duty applies only to customers which have been found to represent a 
high risk. 
Publication of information on the website of the State Tax Administration 
31 Article 60(1) of Directive 2015/849 lays down the obligation to publish 
information relating to any decision imposing an administrative sanction or 
measure for breach of the national provisions transposing Directive 2015/849 
against which there is no appeal. Paragraph 2 of that article allows the Member 
State also to publish sanctions against which there is an appeal, on condition that 
it also publishes information on the appeal and its outcome. 
32 The [referring] court concludes that, when transposing Directive 2015/849, the 
Republic of Latvia introduced the strictest option [available under the Directive] 
― that provided for in Article 60(2) ― and that, in accordance with Article 46(12) 
of the Law on Prevention, decisions of the supervisory authority against which 
there is an appeal (and which are not yet final) must also be published on that 
authority’s website. 
33 Article 60(1) of Directive 2015/849 provides that the publication must include at 
least information on the type and nature of the breach and the identity of the 
persons responsible. The applicant states that, in its publication, the defendant, 
initially (on 11 August 2019), gave an incorrect description of the nature of the 
breach (that the applicant’s internal monitoring system was not developed), 
despite the fact that the applicant had devised an internal monitoring system, even 
though this had been found to have certain defects. In the applicant’s opinion, that 
publication gave the general public an erroneous impression as to the nature of the 
breach committed by the applicant and this has had an adverse impact on the 
applicant’s reputation. 
34 The referring court observes that, even at the time of making the present order, the 
publication also states in relation to the applicant that its internal monitoring 
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system is not fully developed; that a risk assessment has not been carried out or 
documented; that the scope of the customer examination is not consistent with the 
existing risks; that it has not been clarified who is the beneficial owner; that the 
transactions in question have not been adequately monitored, despite the fact that 
the follow-up to the inspection report (of 6 June 2019) did not establish the 
existence of any breaches, which is to say that the breaches had been remedied 
during the inspection. 
35 The Court of Justice of the European Union is therefore asked whether 
Article 60(1) and (2) of Directive 2015/849 must be interpreted as meaning that, 
when publishing information on a particular decision, the competent authority has 
an obligation to ensure that the information published conforms exactly to the 
information set out in the decision.