Objective of the regulation
The main objective of the planned regulation is to enable the efficient location of assets which could be associated with a crime, or be subject to judicial or administrative enforcement.
The draft envisages the creation of a central register, called the Central Database of Accounts (CBR), which would include information on the various types of accounts used to hold assets with details of their holders' identities (without current balances or transaction histories).
The CBR would be operated by the minister responsible for finance and would be in the form of an IT system, based on the Ministry of Finance's existing infrastructure.
Entities covered by the regulation
Many types of entities that operate in financial markets and that offer the opening and running of various types of accounts as part of their business would face an obligation to provide information to the CBR. These would include:
- banks;
- savings and credit union cooperatives;
- payment services providers;
- investment firms;
- insurers;
- investment funds;
- entities involved in the digital currencies market (see detailed information below).
The draft CBR bill defines these entities as "obliged institutions" and imposes regulatory duties on them, which, in the event of failure, would be subject to sanctions.
Regulatory duties
The primary responsibility of obliged institutions would be to transfer information to the CBR about the opening and closing of accounts, as well as changes to account details.
Under the draft CBR bill, an account is understood as a range of various types of accounts, including: current account, bank account other than current, securities account, IKE and IKZE accounts, agreement to provide a safe-deposit box, a product or service enabling storage of authentication data required to access virtual currencies.
Account information includes specific details of the account, as well as its holder. For individuals this includes:
- first name and surname;
- citizenship;
- PESEL number, or date of birth for those without a PESEL number;
- residential address, including the country, locality, postal code, street name, house and/or apartment number;
- details of the identity document: type, number and series of the document.
Information would be transmitted to the CBR electronically.
The draft bill would require information to be provided within 24 hours of the opening or closing of an account, or a change to account information.
The information would be processed for 10 years from the first day of the year following the year in which the information was registered concerning the closure of the account.
Access to information about accounts
Information about accounts would be made available in electronic form in real time to various entities in the public sector in its wider meaning, including: criminal courts, the prosecutor's office, police, the heads of the CBA (Central Anti-Corruption Bureau), ABW (Internal Security Agency) and SKW (Military Counter-Intelligence Service), GIIF (General Inspector of Financial Information), the Chairman of KNF (Financial Supervision Authority) and court bailiffs.
Regulation to include "virtual currencies"
It is worth noting that the draft CBR bill is Poland's first attempt to embrace the digital currencies market with regulation.
The bill includes, among others, a definition of virtual currency, which is understood as "a transferrable property right, the subject of which is a digital representation of value, which has its equivalent in a means of payment, treated as an instrument of exchange and a unit of account without the status of legal tender and not constituting electronic money within the meaning of the Payment Services Act of 19 August, which may be transferred, stored or sold electronically as a means of payment".
This definition will probably be subject to change. It may in fact be expected that the initiators of the draft CBR bill will seek the adoption of the definition of "virtual currency" which is identical to the definition which is to be included in the pending EU draft amendments to the AMLD4 Directive (Directive on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing). We have written about the definition of "virtual currency" under AMLD4 in the article Coming soon: a legal definition of virtual currencies.
In accordance with the draft CBR bill, "entities that offer products or services that enable storage of authentication data required to access virtual currencies, carrying on business in the territory of the Republic of Poland" would become obliged institutions. Individual elements of this definition raise doubts as to the exact scope of the entities that would be recognised under it as obliged institutions. There is a risk that the draft regulations would affect the broad spectrum of innovative projects related to blockchain technology. One also cannot exclude that computer game "currencies" or other virtual assets would be deemed "virtual currencies", which could extend regulation to firms operating in this area.
Sanctions for breaching the bill
The draft CBR bill includes fines and penalties for violations of the provisions of the Act, including a penalty of not more than PLN 1.5 million threatening any obliged institution that fails in its duty to provide information about accounts by the deadline specified in the bill, or a deprivation of freedom for up to 3 years for a similar act committed by a person acting on behalf of or in the interests of an obliged institution.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
