Ethics, compliance with regulations and with the expectations of society are core principles of LHV’s business. High ethical standards also cascade to LHV customers and we expect our customers to value and show similarly high ethical principles, compliance standards, and risk management.

LHV applies strict policies regarding trading with Politically Exposed Persons (PEP), sanctioned counterparties, criminals and persons involved with terrorism.

In addition to the common practice of prohibiting payments linked to illegal activities, LHV also prohibits payments linked to the following business activities:

• Unregulated financial services (where licensing is required)

• Pyramid schemes / multi-level marketing (ML)

• Hawala

• Un-licenced FX broker

• Binary options

• Get rich quick schemes
  (Proposal to pay high rates of return over a small period in return for a small investment)

• Unlicenced gambling
  (e.g. provision of services using offshore licence)

• Crypto-currency

• Facilitating the exchange of anonymous crypto currency

• Unlicenced facilitation of security tokens
  (e.g. tokens that have characteristics akin to traditional instruments like shares, debentures or units in a collective investment scheme)

• Unregulated pharmaceuticals/food supplements
  (e.g.“nutraceuticals”)

• Piracy or illegal streaming

• Counterfeit goods

• Arms / dual-use goods

• Unlicenced charities

• Shell companies
  (A limited liability entity having no physical presence, no employees or no commercial activity in its registered jurisdiction)

• Companies formed of Bearer Shares

• Remittances funded in cash

• Offshore and shell banks
  (Jurisdictions listed by the IMF as Offshore Financial Centers and European Commission blacklist – Common EU list of third country jurisdictions for tax purposes)

• Adult services connected to human trafficking; intermediation of prostitution; production, visual broadcasting of pornography or striptease clubs
  (the approach does not include literature, toys, DVDs, educational or scientific material or dating sites (e.g. Tinder))

• Business types servicing only high-net-worth individuals

• Fifth-party payments & multi-layered MSB arrangements
  (LHV client is facilitating payments for its client’s client’s client)

• Political/religious organisations engaged in hate speech
  (Promoting harm against or directly attacking or threatening other people)

Due to the current geopolitical events and to mitigate the risk of sanctions evasion, LHV does not permit its financial intermediary clients to execute transactions related to the Russian Federation or the Republic of Belarus.

The transactions are only allowed when a payment relates to an expatriate Russian or Belarussian citizen holding a residency permit in the European Union or the United Kingdom.

The deviation from the LHV risk appetite may result in the termination of the client agreement.