You will learn...
- Who is subject to the obligations arising from the AML Act in Poland?
- Obligations related to the preparation of internal AML documentation in Poland- risk assessment and internal AML procedure
- Obligations related to customer verification and identification in Poland
- Obligations of obligated institutions regarding AML and their employees in Poland
- Obligations related to reporting violations to competent authorities in Poland
- What are the penalties for not complying with AML obligations in Poland?
Who is subject to the obligations arising from the AML Act in Polandf?
When considering the obligations arising from the AML Act, it is essential to first understand whom they apply to. In Poland these obligations are imposed on entities explicitly specified in the law, also referred to as obligated institutions. This closed catalog includes, among others, banks, credit and financial institutions, investment firms, and investment funds.
Interestingly, Polish legislator also includes other entities in the group of obligated institutions that are not conventionally associated with anti-money laundering and counter-terrorist financing obligations, such as:
- Entrepreneurs who are not otherwise obligated institutions, providing services related to providing a registered office, business address, or mailing address and other related services to legal persons or organizational units without legal personality.
- Entities engaged in providing accounting bookkeeping services.
It should be noted that classifying a particular entrepreneur as an “obligated institution” under the AML Act based on just one criterion, even if it is peripheral or marginal in relation to their primary activity, requires that entrepreneur to comply with the requirements imposed by the AML Act for their entire business.
Obligations related to the preparation of internal AML documentation in Poland – risk assessment and internal AML procedure
The most crucial internal document in the field of anti-money laundering and counter-terrorist financing in each obligated institution is the risk assessment related to money laundering and terrorist financing. This document determines all further actions taken by the obligated institution in this area.
According to the AML Act, the risk assessment must include, at a minimum, risk factors related to the institution’s customers and their countries or geographic areas, the products and services offered by the obligated institution, and the transactions carried out by the obligated institution and their delivery channels. The risk assessment should be prepared or updated at least every 2 years and should be adapted to the actual business profile of the obligated institution.
After identifying potential threats related to money laundering and terrorist financing in the risk assessment associated with the entity’s activities, the obligated institution is required to prepare and implement an internal procedure for anti-money laundering and counter-terrorist financing. This procedure should take into account the nature, type, and size of the entity’s activities and include information about activities or measures taken to mitigate the risk of money laundering and terrorist financing and the proper management of identified risks.
Obligations related to customer verification and identification in Poland
The essence of regulations related to anti-money laundering and counter-terrorist financing is the necessity for the obligated institution to exercise due diligence when establishing and maintaining business relationships with its customers by implementing appropriate financial security measures commensurate with the identified risk.
According to the AML Act, each obligated institution must identify its customers and verify their identities before establishing a business relationship. Furthermore, the obligated institution must also identify the beneficial owner of the customer and take reasonable measures to verify their identity. If the customer is a legal entity, an organizational unit without legal personality, or a trust, the obligated institution should determine the ownership and control structure.
As part of the customer identification process, the obligated institution should also assess business relationships and, as appropriate, obtain information about the purpose of the transaction and its intended nature. Additionally, the obligated institution should continuously monitor the relationship with the customer.
According to the AML Act, documents related to customer verification and identification should be retained by the obligated institution for a period of 5 years from the date of the termination of business relationships with the customer.
Obligations of obligated institutions regarding AML and their employees in Poland
The AML Act specifies several obligations of obligated institutions concerning their employees. The obligated institution must provide individuals performing duties related to anti-money laundering and counter-terrorist financing with the opportunity to participate in training on the implementation of these obligations, including data protection issues.
Furthermore, the obligated institution should enable its employees to report actual or potential violations of AML regulations anonymously.
Obligations related to reporting violations to competent authorities in Poland
In specific situations, the AML Act requires obligated institutions to report to the relevant state authorities about situations that may pose a potential threat concerning money laundering and terrorist financing.
If, during customer verification, the obligated institution concludes that there is a discrepancy between the information provided by the customer in the Central Register of Beneficial Owners and the information it has identified about the beneficial owner of the customer, it must take steps to clarify the reasons for the discrepancy. In case of confirming the discrepancy, the obligated institution is obliged to report this information to the General Inspector of Financial Information along with the collected documentation.
Informing the General Inspector of Financial Information by the obligated institution is required, among other situations, when accepting a cash payment of EUR 15,000 or more, making a cash withdrawal or conducting a transfer exceeding this amount.
Furthermore, the obligated institution should promptly notify the General Inspector of Financial Information of cases where it has a reasonable suspicion that a specific transaction or certain asset values may be related to money laundering or terrorist financing.
What are the penalties for not complying with AML obligations in Poland?
Failure to comply with the AML obligations can result in the imposition of administrative penalties, such as:
- Publication of information about the obligated institution and the extent of the violation of the law by the institution on the public government website run by the minister responsible for public finances,
- An order to cease specific actions by the obligated institution,
- Revocation of a concession or permit or removal from the register of regulated activities,
- A prohibition on performing duties in a management position by the person responsible for the violation by the obligated institution, for a period not exceeding one year,
- A fine.
Moreover, the AML Act also provides for criminal sanctions for violations of its provisions, which can be imposed on individuals acting on behalf of or for the benefit of the obligated institution.
The AML Act imposes numerous obligations on obligated institutions, which can sometimes be challenging to fulfill, and the sanctions for their violation are relatively high. Therefore, entrepreneurs in Poland should determine whether their company can be considered an obligated institution and, if the answer is affirmative, adjust their business activities to comply with the requirements related to anti-money laundering and counter-terrorist financing.
AUTHOR: Jakub Mazur, Trainee at Grant Thornton legal advisory
