NEWSLETTER

No. 3, February 2021

Malinowski & Associates. Legal Advisors. Partnership

Table of contents

 

Amendments to the Law on Prevention of Money Laundering and Financing of Terrorism and Certain Other Laws

On January 19, 2021, the Parliament received a government draft law on amending the Law on Anti-Money Laundering and Terrorist Financing and certain other laws (print No. 909). The project aims to implement Directive 2018/843 of the European Parliament and of the Council (EU) 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: Directive 2018/843).

The amendment will broaden the subject scope of the March 1, 2018 Law on Anti-Money Laundering and Terrorist Financing (hereinafter: the AML Law). In addition to determining the rules and procedures for countering money laundering and terrorist financing, the law will also determine the conditions for certain obligated institutions to carry out their business activities.

Expanding the catalog of mandatory institutions

The amendment will expand the catalog of obligated institutions within the meaning of the P.P.P.F.T. Law by imposing statutory obligations on the following entities:

1. Entrepreneurs whose primary business activity is the provision of services consisting in the preparation of returns, keeping of tax books, providing advice, opinions or explanations in the field of tax or customs law, not being other obligatory institutions (Article 2(1) added item 15a of the Law on p.p.f.t.),
2. Entrepreneurs engaged in the business of dealing in works of art, collector’s items and antiques and storage of the above. Items for transactions with a value equal to or greater than €10,000.

For clarification purposes, it should only be pointed out that obliged institutions apply financial security measures to their clients, recognize the risk of money laundering and assess the level of the identified risk, and additionally document the identified risk of money laundering (Article 33 of the Law on p.p.f.t.).

Additional obligations of obliged institutions for identity verification

In the current state of the law, obliged institutions verify the identity of the customer or the person authorized to act on his behalf and the real beneficiary on the basis of relevant documents, either stating identity or containing current data from an extract from the relevant register and others. In addition, in the case of the identification of a beneficial owner who is an individual in a senior management position in a situation of documented impossibility of determining or doubts about the identity of the individuals in control of the company (shareholder holding more than 25% of the total number of shares or stocks and the individuals in control of such shareholder if it is a legal entity, etc.), the obligated institutions will document all impediments causing impossibility or doubts about the identity of the above-mentioned individuals. individuals. In addition, mandatory institutions will not be able to rely solely on information from the Central Register of Beneficial Owners when identifying a beneficial owner (amended Article 37 of the Law on p.p.f.t.).

Changes in the ability of obliged institutions to waive financial security measures

Obligated institutions, taking into account the identified risks of money laundering and terrorist financing, may waive the application of financial security measures for the identification of the customer and the beneficial owner and the assessment of the business relationship with respect to electronic money, if the requirements of Art. 38 of the Law on p.p.p.f.t. conditions, including, among others, the established limit for feeding a payment instrument (either a monthly transaction limit or a maximum amount stored electronically), which may not exceed 50 euros. Once the amendments to the P.P.P.F.T. Law take effect, the amount indicated will be increased to 150 euros. The possibility of waiving financial security measures is currently excluded in the case of redeeming e-money or taking in cash the value of e-money when the amount to be redeemed exceeds the equivalent of 50 euros. Once the amendment comes into force, the exemption will also cover situations where a payment transaction is initiated via the Internet or a device that can be used to communicate at a distance, and where the amount of a single transaction exceeds the equivalent of 50 euros.

Obligatory institutions’ obligations to note discrepancies between CRBR information and facts

Mandatory institutions will note discrepancies between the information collected in the Central Register of Actual Beneficiaries and the actual beneficiary information they have established. If the discrepancies are confirmed in the course of investigations undertaken by the institution, the institution will be obliged to provide information about the discrepancies to the competent authority for the Registry. The authority will then be able to initiate proceedings to clarify whether the information in the Registry is correct and up-to-date, and will be able to issue a decision to correct the data (added Articles 61a and 61b of the Law on p.p.f.t.).

New circumstances indicating a higher risk of money laundering and terrorist financing

The legislator in Art. 43 of the Law on p.p.p.f.t. indicated exemplary circumstances, indicating a higher risk of money laundering and terrorist financing, obliging obliged institutions to apply enhanced financial security measures. The amendment will expand the catalog of the aforementioned. situation by the following circumstances:

1. Establishing or maintaining a business relationship or carrying out an occasional transaction without the physical presence of the customer – where the associated higher risk of money laundering or terrorist financing is not otherwise mitigated, including through the use of electronic identification means and trust services that enable electronic identification,
2. covering economic relations or transactions with new products or services, or offering products or services using new distribution channels or new technological solutions,
3. linking a business relationship or occasional transaction to oil, weapons, precious metals, tobacco products, cultural artifacts, ivory, protected species or other items of archaeological, historical, cultural and religious significance or of special scientific value,
4. linking a business relationship or an occasional transaction with a client who is a third-country national and applies for residency or citizenship in a member state in exchange for capital transfers, the acquisition of real estate or government bonds, or investments in corporate entities in a member state.

Obligations of obliged institutions in case of transactions related to a high-risk third country

Mandatory institutions should apply enhanced financial security measures in cases of economic relations or transactions involving a high-risk third country (Article 44 of the Law on p.p.f.t.). The amendment to the Law on p.p.p.f.t. will introduce a number of measures that obligated institutions should take in terms of enhanced financial security measures, among them:

• obtaining additional information about:
  1. The client and the actual beneficiary,
  2. The intended nature of the economic relationship;
• Obtaining information about the source of the client’s and the beneficial owner’s assets and the source of the assets at the client’s and the beneficial owner’s disposal within the framework of a business relationship or transaction;
• Obtaining information about the reasons and circumstances of intended or conducted transactions;
• obtaining approval from senior management to establish or continue business relationships;
• intensify the application of the financial security measure of ongoing monitoring of the client’s economic relations, by increasing the number and frequency of monitoring and increasing the number of transactions typified for further analysis.

When transactions related to a high-risk third country are carried out by a natural person, a legal person or an organizational unit without legal personality, mandatory institutions shall, in addition to the actions indicated above, take one or more of the following actions:

• take additional actions as part of the enhanced financial security measures in place;
• Introduce intensified information reporting or transaction reporting obligations;
• limit the scope of economic relations or transactions (added Article 44a of the Law on p.p.f.t.).

Among the high-risk third countries identified by the European Commission in Commission Delegated Regulation (EU) 2016/1675 of July 14, 2016, supplementing Directive (EU) 2015/849 of the European Parliament and the Council by identifying high-risk third countries with strategic deficiencies, were:

1. Afghanistan
2. Bahamas
3. Barbados
4. Botswana
5. Cambodia
6. Ghana
7. Iraq
8. Jamaica
9. Mauritius
10. Mongolia
11. Myanmar/Burma
12. Nicaragua
13. Pakistan
14. Panama
15. Syria
16. Trinidad and Tobago
17. Uganda
18. Vanuatu
19. Yemen
20. Zimbabwe
21. Iran
22. Democratic People’s Republic of Korea.

If an obligated institution plans to establish a branch or representative office in a high-risk third country, it will be necessary to obtain a permit from the General Inspector of Financial Information (hereinafter: the Inspector General) or the Financial Supervision Commission (added Article 44b of the Law on p.p.f.t.).

The power of the Inspector General or the FSC to order the termination of the relationship of an obliged institution

According to the added Art. 44c of the Law on p.p.p.f.t., the Inspector General and the FSC (with respect to institutions supervised by the FSC) will be given the power to issue a decision ordering a change in the scope or termination of correspondent relations by an obligated institution with a respondent institution located in a high-risk third country. The decision may be issued with respect to the mandatory institutions listed in Article. 2 paragraph. 1 points 1-5, 7-11, 24 and 25 of the Law on p.p.f.t., i.e., among others, banks, payment institutions, investment companies, investment funds, insurance companies, businesses engaged in cantor or safe deposit business, and lending institutions.

Internal procedure of the obliged institution

In the current state of the law, all mandatory institutions put in place an internal procedure for anti-money laundering and countering the financing of terrorism based on Art. 50 of the P.P.P.F.T. Law, which specifies the mandatory elements of the internal procedure. The amendment added the obligation to take into account the procedure in addition:

• Rules for noting discrepancies between information collected in the Central Register of Actual Beneficiaries and information on the client’s actual beneficiaries established in connection with the application of the Law;
• Rules for documenting the impediments identified in connection with verification of the identity of the beneficial owner and actions taken in connection with the identification as the beneficial owner of an individual in a senior management position.

Additional obligations of obliged institutions to employees

Currently, obligated institutions are developing and implementing an internal procedure for employees or other persons performing activities for the institution to anonymously report actual or potential violations of AML and terrorist financing regulations. The amendment will introduce additional obligations for obligated institutions to provide employees and other persons performing activities for these institutions with protection against actions taken against them of a repressive nature or affecting the deterioration of their legal or factual situation, or involving the directing of threats (Article 53, added paragraphs 3 and 4).

Expanding the catalog of entities obliged to report data in the Central Register of Real Beneficiaries

As the law currently stands, general partnerships, limited partnerships, limited joint-stock partnerships, limited liability companies and joint-stock companies are obliged to report data to the Central Register of Beneficial Owners (hereafter also as: CRBR). As of March 1, 2021, the obligation will also be imposed on simple joint-stock companies, following the introduction of such an entity in the Commercial Companies Code. The amendment to the Law on p.p.f.t. envisages expanding the catalog of entities required to report data to the CRBR to include: trusts, partnerships, European economic interest groupings, European companies, cooperatives, European cooperatives, associations subject to registration in the National Court Register and foundations (Article 58, added items 6-13 of the Law on p.p.p.f.t.).

The designated entities will be obliged to report information on beneficial owners within 3 months of the effective date of the provision requiring them to report (Article 14 of the amending law).

Regulate activities for companies or trusts and virtual currency activities

The drafters are introducing Chapter 11a into the P.P.F.T. Law in place of the repealed Chapter 11, titled “Activities for Companies or Trusts and Virtual Currency Activities.”

The competent authority for the register of activities for companies and trusts and the register of activities for virtual currencies is the minister responsible for public finance (Articles 129d and 129p of the Law on p.p.f.t. added).

Entities that, as of the effective date of the legislation regulating activities for companies or trusts and activities in the field of virtual currencies, are engaged in such activities, are required to adjust their activities accordingly to the requirements of the dot. activities for companies or trusts or virtual currency activities within 6 months of the effective date of these regulations (Article 17 of the Amendment Law).

Activities for companies or trusts

The amendment stipulates that business activities involving the provision of services referred to in Art. 2 paragraph. 1(16) of the P.P.P.F.T. Act, consisting of:

• creation of a legal entity or an organizational unit without legal personality,
• Serving as a member of the board of directors or enabling another person to perform this function or a similar function in a legal person or unincorporated entity,
• providing a registered office, business or mailing address and other related services to a legal entity or unincorporated entity,
• acting or allowing another person to act as trustee of a trust that was created by a legal action,
• acting or enabling another person to act as a person exercising rights from shares for an entity other than a company listed on a regulated market subject to disclosure requirements under European Union law or subject to equivalent international standards,

– Hereinafter referred to as “activities for companies and trusts.”

will constitute a regulated activity within the meaning of the Entrepreneurs’ Law, and can only be carried out after being registered in the register of activities for companies or trusts (added Article 129a of the Law on p.p.f.t.).

The obligation to register does not apply to legal advisors, att orneys and companies of legal advisors and attorneys.

Activities for companies and trusts can be performed via natural person, legal person or organizational unit an unincorporated entity, while a natural person (and, in the case of a legal person and an organizational entity, partners authorized to represent or entrusted with the management of the affairs of the company and members of the management bodies), must not have been convicted of intentional crime against the activities of state institutions and local self-government, against the administration of justice, against the credibility of documents, against property, against economic turnover and property interests in civil law transactions, against money and securities trading, the crime referred to in Art. 165a of the Criminal Code, an offense committed for financial or personal gain, or an intentional fiscal offense (added Article 129b of the Law on p.p.f.t.). The requirement of no criminal record also applies to persons directing the performance of activities and to the beneficial owner of the entity conducting such activities.

Another requirement that will apply to the above. persons, is the obligation to have knowledge or experience related to activities for companies or trusts, which is considered fulfilled in the case:

• Completion of a training course or course covering legal or practical issues related to activities for companies or trusts, or
• Performing, for a period of at least one year, activities related to activities for companies or trusts (added Article 129c of the Law on p.p.f.t.).

Entry in the register of activities for companies and trusts is made on the basis of the entrepreneur’s application on an electronic form (added Article 129f of the Law on p.p.f.t.), containing:

• name or name (company);
• the number in the register of entrepreneurs in the National Court Register, if such a number has been assigned, and the tax identification number (NIP);
• indication of services provided to companies or trusts;
• qualified electronic signature, trusted signature or personal signature of the applicant;
• A statement of the truthfulness and completeness of the data and fulfillment of the conditions for the No criminal record and knowledge or experience.

The minister in charge of the Ministry’s affairs. The public finance authority refuses, by way of a decision, to make an entry in the register if the application is incomplete and has not been completed in time, or the data in the application is inconsistent with the facts (added Article 129g of the Law on p.p.f.t.).

An entity entered in the Register of Entrepreneurs of the National Court Register, performing activities for companies or trusts, is obliged to notify the minister responsible for public finance in writing of the suspension of its activities within 14 days of the suspension (added Article 129j of the Law on p.p.f.t.).

An entity may be removed from the register by a decision of the competent authority in the following cases (added Article 129k of the Law on p.p.f.t.):

• At the request of the subject;
• After obtaining information about deletion of the entity from CEIDG or KRS;
• if found:
  1. Failure of the entity to meet the conditions required by law to perform activities for companies or trusts,
  2. That the subject has submitted a statement of no criminal record or knowledge that is factually incorrect.

It is worth noting that in the case of conducting activities for companies or trusts without obtaining registration, the entity conducting such activities will be subject to a fine of up to PLN 100,000 (added Article 153a of the Law on p.p.f.t.).

Virtual currency business

The amendment will introduce the principle that business activities involving the provision of services referred to in Art. 2 paragraph. 1(12) of the P.P.P.F.T. Act, which include:

• Exchange between virtual currencies and means of payment,
• Exchange between virtual currencies,
• brokerage of the above. exchanges,
• to maintain accounts that provide authorized persons with the ability to use units of virtual currencies, including carrying out transactions for their exchange,

– Hereafter referred to as “virtual currency business,

will constitute a regulated activity within the meaning of the Entrepreneurs Law, and will only be able to be carried out after being entered in the register of virtual currency activities (added Article 129m of the Law on p.p.f.t.).

Entity requirements for no criminal record and knowledge and experience of persons operating virtual currencies (including partners, members of bodies, managers and beneficial owners) are analogous to the requirements applicable to persons operating companies and trusts (added Articles 129n and 129o of the Law on p.p.f.t.).

Entry into the register of virtual currency activities shall be made on the basis of the entrepreneur’s application on an electronic form (added Article 129r of the Law on p.p.f.t.), containing:

• name or name (company);
• the number in the register of entrepreneurs in the National Court Register, if such a number has been assigned, and the tax identification number (NIP);
• indication of the virtual currency services provided;
• qualified electronic signature, trusted signature or personal signature of the applicant;
• Statement of truthfulness and completeness of data and fulfillment of conditions for the No criminal record and knowledge or experience.

The minister in charge of the Ministry’s affairs. The public finance authority refuses, by way of a decision, to make an entry in the register if the application is incomplete and has not been completed by the deadline, or the data in the application is inconsistent with the facts (added Article 129s of the Law on p.p.f.t.).

An entity may be removed from the register by a decision of the competent authority in the following cases (added Article 129w of the Law on p.p.f.t.):

• At the request of the subject;
• After obtaining information about deletion of the entity from CEIDG or KRS;
• if found:

1. Failure of the entity to meet the conditions required by law to carry out activities in the field of virtual currencies,
2. That the subject has submitted a statement of no criminal record or knowledge that is factually incorrect.

An entity entered in the Register of Entrepreneurs of the National Court Register, performing virtual currency activities, is obliged to notify the minister responsible for public finance in writing of the suspension of its activities within 14 days of the suspension (added Article 129v of the Law on p.p.f.t.).

In the case of operating virtual currencies without obtaining a registration, the entity conducting such activities will be subject to a fine of up to PLN 100,000 (added Article 153b of the Law on p.p.f.t.).

Expansion of the catalog of actions and omissions of mandatory institutions resulting in the imposition of an administrative penalty

Obligated institutions should comply with all obligations imposed on them by the Law on Anti-Money Laundering and Financing of Terrorism. An administrative penalty may be imposed on an obligated institution for failing to comply with certain obligations set forth in Chapter 13 of the P.P.F.T. Law.

The amendment provides for the expansion of the catalog of actions and omissions of obligated institutions, the consequence of which will be the imposition of an administrative monetary penalty. Thus, as a result of the addition of points 14-17 in Art. 147 of the Law on p.p.p.f.t., threatened by an administrative penalty was failure to comply with the obligation:

1. to keep information about the planned initiation and the conduct of analyses on money laundering or terrorist financing confidential,
2. implementation of post-inspection recommendations issued by the Inspector General,
3. to obtain permission to establish a branch or representative office in a high-risk third country,
4. To comply with the decision of the Inspector General or the FSC regarding. establishment of a branch or representative office in a high-risk third country and the scope of correspondent relations with a respondent institution based in a high-risk third country.

Fines for companies and entities required to report data to CRBR

Currently, companies obliged to report information to the Central Register of Real Beneficiaries that have not fulfilled their obligation to report within the statutory deadline are subject to a fine of up to PLN 1,000,000. The amendment to Art. 153 of the P.P.P.F.T. Law will change the wording of the provision, adding to the elements of the type of act punishable by adding failure to update information and providing information that is not in accordance with the facts. In addition, a penalty of up to PLN 50,000 will be imposed on the actual beneficiary who failed to provide information to the entity obliged to report to the CRBR, as a result of which the entity failed to report or update the information within the statutory deadline, or provided information that is inconsistent with the facts.

Real estate brokerage activities

The law amending the Anti-Money Laundering and Countering the Financing of Terrorism Act also amends the Law on Real Estate Management (hereinafter: the A.G.A.). In particular, it introduces a requirement that those engaged in real estate brokerage activities not have a criminal record, analogous to the activities of those providing services to companies or trusts and virtual currencies activities (added Article 180a of the U.G.N.). A person who conducts such activity in violation of the no-crime requirement is subject to a fine of up to PLN 50,000 (Art. 198b, added item 2a of the U.G.N.).

Entrepreneurs who are engaged in real estate brokerage activities on the effective date of the amendment are required to adapt their activities to the above-mentioned amendments. requirements within 6 months of the effective date of the amendment in this regard (Article 17 of the Amendment Law). It should be noted that it is the will of the drafters that the provisions in this regard enter into force 6 months after the date of promulgation (Article 23 item 2 of the amending law).

Cantor activities

The amendment to the AML/CFT Law will also slightly change the foreign exchange law with regard to the requirement that a person performing cantor activities not have a criminal record.

Currently, a natural person who has not been validly convicted of a fiscal offense or a crime committed for financial or personal gain, as well as a legal person and an unincorporated company, no member of the authorities or partner, respectively, of which has been convicted of such an offense (Article 12 of the Foreign Exchange Law), may engage in cantor activities. Once the amendments to the Law on p.p.p.f.t. enter into force, the requirement for partners not to have a criminal record will be limited to partners authorized to represent the company and partners entrusted with managing the company’s affairs. In addition, the requirement of no criminal record will also apply to those who direct the performance of activities related to the conduct of exchange activities and to beneficial owners.

Entrepreneurs who operate a cantor business on the effective date of the amendment are required to bring their operations into compliance with the above-mentioned amendments. requirements within 6 months of the effective date of the amendment in this regard (Article 18 of the Amendment Law). It should be noted that it is the will of the drafters that the provisions in this regard enter into force 6 months after the date of promulgation (Article 23 item 2 of the amending law).

Gaming activities

Following the entry into force of the amendments to the Law on Anti-Money Laundering and Financing of Terrorism, the requirement to no criminal record and an impeccable reputation natural persons who are partners (shareholders) of a company engaged in gaming (cylindrical, card, dice, slot machines and bingo) and pari-mutuel betting, representing at least 10% of the share capital, will be extended to actual beneficiaries Such a company (Article 12 of the Gambling Law).

Entrepreneurs who are engaged in gambling activities on the effective date of the amendment are required to adjust their activities to the above-mentioned amendments. requirements within 6 months of the effective date of the amendment in this regard (Article 19 of the Amendment Law). It should be noted that the will of the drafters is that the regulations in this regard will come into effect 6 months after the date of promulgation (Article 23, item 2 of the amending law).