In recent years, few pieces of legislation have affected the non-financial sector as much as the Anti-Money Laundering and Countering the Financing of Terrorism Law (the AML act). The newest long-awaited amendment to the AML act was signed by Poland's President on 8 April.
The latest amendment to the AML implements significant modifications resulting from EU regulations. Its primary aim is to increase the transparency of financial flows, and therefore to support the effectiveness of the authorities responsible for the detection of funds derived from criminal activity or used for terrorist financing purposes.
So what exactly is different now? In my view the 10 most important changes since 2018 are:
1. Further extension of the catalogue of obliged institutions
The new catalogue includes entrepreneurs whose main business activity is rendering services related to preparing declarations, keeping tax books, providing advice, opinions or explanations regarding tax or customs laws. An interesting development is that it also embraces entrepreneurs who deal or trade, or act as an intermediary in trading in works of art and antiques.
2. Changes to the definitions of beneficial owner (UBO) and politically exposed person (PEP)
Here the alterations to the definitions will certainly affect the need to adjust obliged institutions' internal AML processes and dedicate extra focus to the information collected at the time of client take-on and the range of persons examined when identifying UBOs and PEPs.
3. New prerequisites for application of financial security measures to existing clients
From now on the financial security measures must be always applied in cases when there has been a change in the previously established data related either to beneficial owner or the client.
4. Changes in the scope of data collected regarding a client's identity verification
Another interesting development is that obliged institutions must document the reasons why it is not possible to verify certain information about a client, and take that into account in performing the client risk assessment. This will inevitably increase the administrative workload within the know-your-customer (KYC) team.
5. Additional guidelines on proper verification of the beneficial owner
Verification of the beneficial owner cannot rely solely on data verification in the Central Register of Beneficial Owners (CRBO). Reliance on the register is a supportive solution but it must not be the primary one.
Additionally, the process of verifying the UBO and documenting the process has been further formalized. The extra procedure for clarifying discrepancies between the client's CRBO record and the result of the obliged institution's own verification has also been defined now.
Further, the catalogue of entities that must report details of beneficial owners has been expanded and currently a larger number of companies will have to register their UBOs in the Central Register of Beneficial Owners.
6. Changes in the application of enhanced financial security measures
In practice this amendment of the law increases the number of situations in which it is necessary to apply enhanced KYC measures and it further introduces a list of mandatory information that an obliged institution is required to obtain when applying enhanced financial security measures in the case of higher-risk countries.
7. Creation of a list of PEPs
The new law says that the Ministry of Finance will publish a list of positions that should be classified as politically exposed persons, which should hopefully facilitate the decision process on PEP risk.
8. New mandatory elements of the internal AML framework
There is a further new provision that creates a clear obligation to include personal data protection aspects into AML training and awareness sessions. It is also explicitly required that obliged entities review and update their AML policies regularly and continuously.
9. Changes in the rules regarding whistleblowing
An active obligation for obliged institutions to protect whistleblowers has been introduced. The catalogue of prohibited negative actions against whistleblowers has been expanded. This extends beyond employees, and includes other persons performing activities for the benefit of the obliged institution.
10. Obligation to register certain obliged institutions
Entrepreneurs conducting activities on behalf of companies or trusts and activities in the field of virtual currencies will be subject to entry in the relevant registers. The deadline for entry is six months from the effective date of the law, ie, 8 November 2021. Obtaining an entry in the register is a condition for being able to provide these services.
In summary, most of these listed changes result from the need to make the often ineffective anti-money-laundering and counter-terrorist financing system more coherent and sealed. In my view this is also an attempt to make the heterogeneous legal systems of European Union member states more coherent. These changes are probably not the last ones and there are more and more discussions at EU level about EU regulations directly applicable in member states and about an EU supervisory authority for the AML-CFT regime.
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