Published: 10.07.2024

What is a basic account

A basic account is a type of payment account that provides access to basic payment account functions for the customer, a natural person residing in the EU. Basic account services are provided to ensure that:

  • customers are not discriminated based on their citizenship or country of residence;
  • customers have access to basic account services regardless of their financial circumstances;
  • basic account services are available to all residents, including those considered high-risk by credit institutions, such as refugees and individuals released from imprisonment.

In Latvia, credit institutions whose business models include providing payment account services to EU residents/customers are obliged to offer basic account services.

Basic account services

A basic account may give access to the following services:

  • opening, servicing and closing of the payment account;
  • depositing money into the payment account. To manage the risks associated with money laundering and terrorism and proliferation financing (ML/TPF), a bank may set limits on the incoming payments. These limits can be based on factors such as the amount and geographical origin of the payments. Additionally, the bank may establish limits aligned with typical consumer practices, allowing payments for wages, pensions, government support, academic scholarships, and similar transactions;
  • cash withdrawals from a payment account at a credit institution or an ATM;
  • access to the following payment services:
    • credit transfers, including regular payments;
    • payment card payments;
    • direct debit payments where the payee's account is held with a service provider in Latvia or any other EU Member State.

Credit institutions are required to provide the aforementioned services to the same extent and range as they do for customers with other types of payment accounts. For example, a credit institution is not required to provide payment card services for a basic account if such services are not offered to other customers. Basic account services are generally offered in euro, but they can also be provided in another currency agreed upon by the customer and the credit institution.

Right to receive basic account services

EU residents and individuals without a residence permit who cannot be expelled from Latvia are entitled to a basic account. Basic account services are accessible to all natural persons, provided they do not use the basic account for business or professional activities. A customer may hold only one basic account at a time.

Procedure for opening a basic account

 To open a basic account, customers must submit an application to their chosen credit institution. The customer is required to submit:

  • a statement confirming that the customer does not hold a payment account with another Latvian credit institution granting access to basic account services;
  • any additional information that the credit institution requires to open a basic account. Opening a basic account is also subject to the requirements of the Law on the Prevention of ML/TPF with regard to the obligation for the customer to provide the information that the credit institution requires to conduct customer due diligence.

The credit institution must open or refuse to open a basic account within ten business days of receiving the information.

Reasons for refusing to open a basic account

Credit institutions may not refuse to open a basic account based on a customer's citizenship, residence, or financial circumstances. Refusal is permissible only in cases stipulated by law:

  • the customer does not comply with the requirements of the Law on the Prevention of ML/TPF or there are obstacles arising from the aforementioned law (AML reasons);
  • the customer has provided false information.

Opening a basic account may be refused in the following cases:

  • the customer already holds an account with another credit institution in Latvia that provides access to services equivalent to those covered by a basic account, unless the customer has been notified of the closure of that account;
  • the customer no longer qualifies as a person entitled to open a basic account;
  • opening or servicing the payment account may expose the credit institution to reputation risks; this includes situations where the person is subject to international or national sanctions.

Terminating the standard agreement for a basic account

A credit institution unilaterally terminates a standard agreement where:

  • servicing the payment account conflicts with regulatory requirements, including those for the prevention of ML/TPF;
  • the customer has knowingly used the payment account for illegal activities.

A credit institution may unilaterally terminate a standard agreement where:

  • no transactions have been conducted in the payment account for more than 24 months;
  • the customer has provided false information upon which the basic account was opened;
  • the customer no longer qualifies as a person entitled to basic account services;
  • the customer has opened another payment account with a commercial credit institution in Latvia that provides access to services equivalent to those covered by a basic account;
  • servicing the basic account exposes the credit institution to reputation risks;
  • the credit institution ceases to provide payment services to all its customers;
  • the customer's debt obligations for the use of the basic account and its associated services exceed the balance of the basic account within less than six months.

In the event of a refusal to open a basic account or a unilateral termination of a standard agreement, the customer has the right to file a complaint with the Consumer Rights Protection Centre or, for out-of-court dispute resolution, with the Ombudsman of the Finance Latvia Association.

Opening a basic account for a person subject to sanctions

A credit institution has the right to refuse to open an account for a person subject to international or national financial sanctions. However, the purpose of sanctions is not to deny access to resources required to cover basic needs. In such cases, payments may be governed by the Financial and Capital Market Commission's Regulation on the Sanctions Risk Management which stipulates situations where a credit institution may conduct financial transactions with individuals subject to financial restrictions.

Basic account servicing fee

The fee for servicing a basic account must be proportionate. The fee must not exceed the standard fee charged by credit institutions from their customers – natural persons – for payment account services. Additionally, it may not exceed the average fee applied to credit institution customers in Latvia for such services by more than 25%, unless the excess covers the cost price of those services. For the average annual fee charged by Latvian credit institutions from their customers for payment account services, please see the website of the Finance Latvia Association.