Amendment to the AML Act - new obligations for entrepreneurs
The draft amendment to the Act on Counteracting Money Laundering and Terrorist Financing (AML Act) introduces, among other things: a change of definition of beneficial owner, increased financial security measures, the obligation to verify information in the Central Register of Beneficial Owners (CRBO) and new fines.
Beneficial owner – change of definition
One of the key solutions of the AML Directive V is the change of definition of beneficial owner by explicitly indicating that "any natural person" who meets the criteria specified in the Act is considered to be a beneficial owner. At the same time, as part of the amendment, a decision was made to change definition of beneficial owner by removing phrases which link the beneficial owner with the concept of "client". The strict connection of the concept of beneficial owner with the concept of client was considered undesirable due to the possibility of adopting an interpretation which assumes that a given entity is not a beneficial owner until it uses the services of the obligated institution.
In addition, the scope of definition of beneficial owner of the trust was also extended, by directly indicating that beneficial owners should be considered all beneficial owners, without being content with identifying only one beneficial owner. Apart from beneficiary (the person benefiting from the trust), the beneficial owner of the trust may also be a group of persons in whose main interest the trust was established or operates (when it is impossible to identify natural persons benefiting from a given trust).
Moreover, it is also planned to expand the group of entities obliged to obtain an entry in the register of beneficial owners, including professional partnerships, European economic interest groups, European companies, cooperatives, European cooperatives and associations subject to entry in the National Court Register.
Increased financial security measures
An important change is an update of circumstances triggering an obligation to apply the increased financial security measures. It is indicated that the obligated institution should apply them, inter alia, when "complex" transactions are disclosed or "transaction is carried out in an unusual manner". However, it should be noted that provisions of the amendment act do not provide examples of such transactions.
The obligation imposed on the obligated entities will also be modified by the obligation to apply due diligence measures not only to new clients, but also to the existing clients. Pursuant to the amended provision, the obligated institutions apply financial security measures also in relation to clients with whom they maintain economic relations, in particular when there has been a change in the previously established nature or circumstances of economic relations.
The obligated entities were also required to obtain confirmation of registration of a potential client in the relevant register of beneficial owners or to obtain an extract from such register when establishing new business relationship. The obligation to identify and verify the identity of the beneficial owner, as a financial security measure, is one of the basic obligations of the obligated institutions.
New measures due to having a seat in a third country
The draft amendment also introduces a new obligation for obligated institutions consisting in the fact that they are obliged to adopt at least one of the three solutions aimed at reducing the risk associated with transaction with a high-risk third country, identified by the European Commission, under which they undertake at least the following actions:
- undertaking additional actions as part of the applied increased financial security measures;
- introducing intensified obligations related to providing information or reporting transactions;
- restricting the scope of economic relations;
Obligation to verify information in the CRBO
The provisions of the AML Directive V introduce a mechanism for verifying accuracy and veracity of information entered in the Central Register of Beneficial Owners. In line with the above, the obligated institutions will be required to record any discrepancies between the facts concerning the client, determined by the obligated institution, and the data available in the central register of beneficial owners. At the same time, the obligated institution will have to take appropriate steps to clarify the discrepancies, and if discrepancies are confirmed, provide the competent register with information about the discrepancies together with a justification.
One of the key changes is the increased possibility to penalize companies that have not complied with the obligation to update the information listed in Article 59 of the AML Act, within the time limit specified in the Act or provided information inconsistent with the facts. The fine, as in the case of failure to register the beneficial owner, may even reach PLN 1,000,000.
In summary, the planned changes will significantly affect the activity of businesses. They will impose new requirements and obligations on some obligated institutions, on which their ability to conduct business will depend. As a whole, the draft amendment is to ensure the correct implementation of the EU directive by clarifying the provisions of the national act on counteracting money laundering and financing of terrorism.
Klaudia Szatan, Junior Associate, TGC Corporate Lawyers
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