What has the amendment of the Law of AML changed in the Polish legal system?
Author: Jarosław Kruk - attorney at law, managing partner | Sylwia Działo - lawyer
What has changed the amendment of the Law on Prevention of Money Laundering and Financing of Terrorism in the Polish legal system?
On April, 2021 The President of the Republic of Poland signed an amendment of the Law on Prevention of Money Laundering and Financing of Terrorism and other certain acts. The main purpose of the amendment of the regulations previously in force was the need to implement the provisions of the European Parliament and the Council (EU) 2018/843 of May 30, 2018, amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purpose of money laundering or terrorist financing and amending Directives 2009/138/EC and 2013/36/EU hereinafter referred to as the V AML Directive.
The introduced changes not only broadened the scope of regulations, but also substantially modified the existing wording of the AML Act.
The most important change in the Act include the change of the definition of a beneficial owner, modification of the procedure of anonymous reporting of violations, expansion of the list of obliged institutions, application of raised financial security measures or introduction of solutions aimed at reducing the risk related to the transaction conducted with a high-risk third country. We should not forget either to authorize the Minister responsible for finance to issue an ordinance specifying the list of domestic public positions and functions which are politically exposed positions, to introduce solutions concerning the regulation of activities connected with the provision of services to companies and trusts and activities connected with the provision of services concerning virtual currencies, or to clarify the rules on storage of documents by obliged institutions and information obtained as a result of the application of financial security measures. An extremely important change is the value of fines imposed on entities obliged to report information on actual beneficiaries and update them or when such entities indicate information that is inconsistent with the facts. The administrative penalty amounts up to 1 000 000 zlotys.
The amendment also provides for changes related to the functioning of the Central Register of Beneficial Owners and the obligation to record discrepancies between the information gathered from the CRBR and that gathered by the institution in the application of financial security measures, as well as changes in the value of administrative penalties imposed.
It is worth emphasizing, that the changes introduced include not only new entities, but also those that were already mentioned in the Act. In connection with the amendment, obliged institutions should verify their internal procedures and extend them so that they comply with the amendment regulations. On the other hand, entities, which so far have not been listed as obliged institutions, and according to the amendment will obtain this status, should implement all mechanisms required from them by the AML.
Most importantly, as we read in the explanatory memorandum to the amendment to the Act, the purpose of the implementation of the provisions of the Directive of the European Parliament and the Council (EU) 2018/843 was to modify the EU anti-money laundering and counteracting the financing of terrorism, which will increase the transparency of financial flows in the financial system, and thus enable more effective functioning of the authorities responsible for detecting founds derived from activities of this nature criminal or for financing terrorist activities. The amendment Act also amends the provisions concerning the suspension of transactions and the blocking of accounts, introduces more precise rules for the cooperation of the General Inspectorate of Financial Information with foreign financial intelligence units and Europol and adds the possibility of using specific restrictive measures against individuals, groups and entities.
In the light of the amendment, such entities as government administration bodies, local government authorities, other state organizational units, as well as the Financial Supervision Commission, the Supreme Audit Office and the National Bank of Poland have been obliged to cooperate in developing a national risk assessment and anti-money laundering and terrorist financing strategy.
It should be noted, that the law not only meets EU requirements, but also promotes control of transactions and more efficient detection of financial crime. The work on the draft of the amendment in question has been going on for a long time and is being introduced gradually, which will make it possible to familiarize oneself with internal procedures and regulations from the point of view of efficiency and legality, and to prepare for their implementation. For many entities, this process may involve making significant organizational changes, updating or adopting new procedures, implementing new operational tools or training staff in their practical application, as well as reviewing the obliged institutions approach to processes relating to the implementation of financial security measures. Additional time will be given to entities, for which the absence of law concerning the changes in the current legislation will be respectively three or six months, therefore the deadline for the institutions obliged to adapt to them will be extended.
It is worth noting, that the adoption of the new law instead of introducing subsequent amendments to the previously existing law, brings many benefits and should be assessed positively. The amendment of the Law on Prevention of Money Laundering and Financing of Terrorism is a very important change to clarify the existing provisions on internal systems for preventing money laundering and terrorism financing in the Polish legal system.