Banking & Fintech

Do cryptocurrencies help circumvent sanctions against Russia? New KNF communication

On 10th June 2022, the Polish Financial Supervision Authority (KNF) issued a communication on sanctions against Russia and Belarus and applying financial security measures under the Polish AML Act in the context of the cryptocurrency business. According to KNF the technology behind cryptocurrencies (and other virtual currencies) – which allows remaining anonymous or at least significantly impede the identification of the parties to the transaction and final beneficial owners – makes it easier for different entities to circumvent EU and Polish sanctions against Russia and Belarus.

 

Who are the addressees of KNF communication?

KNF communication of 10th June 2022 is addressed to all supervised entities, in particular to:

  • entities entered into virtual currency operators’ register,
  • entities providing payment services (including: domestic payment institutions, small payment institutions, electronic money institutions, and bank) to virtual currency operators,
  • entities providing financial services to virtual currency operators.

 

What are the expectations of KNF?

KNF expects supervised entities to:

  • exercise the highest diligence and prudence in undertaking and continuing cooperation with entities from the virtual currency industry or providers of payment services or other financial services for such entities, especially in connection with the fulfillment of obligations under the provisions of the Polish AML Act. What’s crucial, the obligated entities should apply enhanced financial security measures. Particular attention should be paid to the correct application of financial security measures, including thorough monitoring of business relations with customers and increased vigilance in the scope of ongoing analysis of transactions carried out.
  • decide to terminate cooperation or not start a business relation, if it is impossible to exclude the existence of links between the customers or transactions with the Russian Federation or the Republic of Belarus, or with transactions carried out on behalf of or for the benefit of persons related to these countries

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Author team leader DKP Legal Piotr Putyra
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