The majority of the provisions of the Act on Anti-Money Laundering and Anti-Terrorist Financing of 1 March 2018 (hereinafter referred to as the “Act”) will take effect on 13 July 2018. The purpose of the Act is to realign Polish legislation with EU directives and supersede the previously effective act of 16 November 2000.
The Act aims to improve the effectiveness of the national system of anti-money laundering and anti-terrorist financing. It redefines institutions bound under the Act, referred to as obliged entities. These entities will now be under obligation to assess the risk of money laundering and terrorist financing and apply customer due diligence measures. The Act confers the status of obliged entities upon various types of institutions, such as banks, credit institutions, as well as tax advisors or notaries public. The Act defines government administration bodies as having jurisdiction over anti-money laundering and anti-terrorist financing. These comprise the Minister of Finance and the Inspector General of Financial Information (hereinafter referred to as “IGFI”), serving as a minister at the Ministry of Finance. Additional rights will be granted to IGFI, such as drawing up the national assessment of risks of money laundering and terrorist financing and issuing decisions on the list of individuals and entities to which special restrictive measures apply.
For instance, the Act includes among the obliged entities businesses providing virtual currency exchange services. This means that virtual currency exchanges and entities that manage portfolios of such currencies will be required to apply the due diligence measures laid down under the Act to their customers. This will enable transaction monitoring in order to identify suspicious deals. Further, the first-ever definition of virtual currency in the Polish legal system has been provided. Under the Act, virtual currency is “a digital representation of value, convertible as part of business dealings into legal tender and accepted as a means of exchange that can be also digitally stored or transferred, or traded online.”
The Act lays down new responsibilities, composition, and operating procedures for the Financial Security Committee that supports IGFI in its role. Further, the Central Register of Beneficial Owners will be established as a publicly available resource to help protect market participants. The Act also institutes mechanisms of account blocking and putting a transaction on hold in the event of suspicion that money laundering or terrorist financing may be involved.
The Act specifies more accurately the terms of cooperation between IGFI and foreign Financial Intelligence Units as well as Europol. The provisions on inspection of obliged entities and administrative sanctions taking the form of administrative penalties, including fines, imposed upon obliged entities that fail to fulfil their obligations under the Act have been modified. The Act provides that the fine imposed on legal entities listed under its provisions will be up to EUR 5,000,000 or 10 percent of the total annual turnover.
In addition to the above fine, the Act sets forth administrative penalties, including:
- A cease and desist order requiring the entity to stop specific actions it engages in.
- Revocation of a licence or permit or striking the entity off the register of regulated activity.
When deciding on the type of administrative penalty and its amount, a number of factors are considered, including the gravity and duration of the breach, the degree of responsibility of the entity, and its financial strength.
The Act is likely to contribute towards improved efficiency of the system of anti-money laundering and anti-terrorist financing and achieving a better match between Polish regulations and international recommendations.