Changes under new AML/CTF Act

The new Act on combating money laundering and the financing of terrorism entered into force on May 15^th, 2021. As the Act’s subjective scope is being extended, more entrepreneurs will be covered by the definition of an obliged institution. Significant changes also relate to the rules for the application of financial security measures and the verification of data contained in the Central Register of Beneficiaries (CRBR), including the possibility of imposing a financial penalty on a beneficial owner who has failed to comply with the obligation to provide relevant information to the obliged institution.

The provisions of the new Act on combating money laundering and the financing of terrorism (hereinafter: ‘AML’) entered into Polish legal system on May 15^th, 2021, include:

1. extending the list of obliged institutions to include entrepreneurs (i) conducting activities related to trading and storing works of art, collector’s items, and antiques, with respect to transactions with a value of at least EUR 10,000 and (ii) providing advice on tax matters but not being tax advisors (although the provisions relating to the above entrepreneurs do not enter into force until 31 July 2021),
2. clarifying the definitions of (i) beneficial owner by indicating that the provision refers to „any natural person” and (ii) politically exposed person by excluding middle and lower-level positions from this definition,
3. clarifying the rules on the application of financial security measures by obliged institutions,
4. increasing the threshold for waiving the application of financial security measures with respect to the maximum amount stored electronically from EUR 50 to EUR 150 (we have already described the details in the previous article on AML regulations),
5. the need for obliged institutions to apply enhanced financial security measures in relation to a transaction involving a high-risk third country, by „taking additional steps”, introducing „enhanced obligations relating to the provision of information or reporting of transactions” and limiting such business relationships or transactions,
6. requiring virtual currency traders to apply financial security measures also to occasional transactions of the equivalent of EUR 1,000 or more carried out using virtual currency,
7. shortening the period for which obliged institutions shall store documents and information obtained as a result of the application of financial security measures – currently under new AML, the 5-year period runs from the date of the termination of business relations with the client or from the date on which the occasional transaction was carried out, and not – as it was the case previously – from the first day of the year following the year in which such business relations were terminated or such occasional transactions were carried out,
8. extending the list of the entities under obligation to report information on beneficial owners, which now include partnerships, as well as European economic interest groups, European companies, cooperatives, including European cooperatives, associations subject to registration in the National Court Register and foundations. The above list should also include a trustee (or a person of equivalent standing) of trust (i) residing or established in the territory of the Republic of Poland or (ii) entering into business relations or acquiring real estate in the territory of the Republic of Poland on behalf or for the benefit of the trust,
9. the possibility of imposing a pecuniary penalty on a beneficial owner who has not fulfilled the obligation to provide the obliged institution with all the information and documents necessary to notify/update to the CRBR, up to the amount of PLN 50,000. The new provisions of the AML also provide for a pecuniary penalty of up to PLN 100,000 for entities (i) conducting activities on behalf of companies or trusts without obtaining an appropriate entry in the register of such activities and (ii) conducting activities in the field of virtual currencies without first obtaining an entry in the relevant register,
10. the need to record discrepancies between the information collected in the CRBR and the information on the beneficial owner of the customer as determined by the obliged institution. If the discrepancies noted are confirmed, the obliged institution must provide the competent authority for the CRBR with verified information on these discrepancies, together with justification and documentation of the discrepancies noted.