Important amendments to the AML Act from 31 October 2021
31 October 2021 was the effective date of the last part of the regulations on counteracting money laundering and terrorism financing which adjust Polish regulations to the EU AML Directive. Which companies are subject to the new obligations and when do they have to comply with them?
The act amending the Act on Counteracting Money Laundering and Terrorism Financing was published on 30 April 2021. The amendments are aimed, in particular, at increasing transparency of information about ultimate beneficial owners and improving access of authorities appointed to combat money laundering to information kept by obliged institutions. Obliged institutions have additional obligations imposed on them in respect of applying security measures and identifying ultimate beneficial owners.
Some of the new regulations started to apply on 15 May 2021, other on 31 July 2021 and the last part of the amendments – discussed in the article below – came into effect on 31 October 2021.
AML Act – major changes from 31 October 2021:
- Introduction of new types of regulated activities:
- Register of activities for companies or trusts
- Register of virtual currency activities
- Extension of the list of entities obliged to report information to the Central Register of Beneficial Owners (CRBO)
- Introduction of new obligations for ultimate beneficial owners
- Obligation of ultimate beneficial owner’s verification by the obliged entity
New types of regulated activities applicable from 31 October 2021
The act introduces two new registers: “Register of activities for companies or trusts” and “Register of virtual currency activities”. Below you will find a short description of each of the registers.
- Register of activities for companies or trusts
The amendment imposes an obligation of meeting certain requirements and obtaining entry in the relevant register kept by the Head of the Fiscal Administration Chamber in Katowice, i.e. the “Register of activities for companies or trusts”, for entities carrying out regulated activities.
Entry in the new register is made for entrepreneurs carrying out the so-called “activities for companies or trusts”, consisting in:
- Forming a legal entity or an organisational unit without legal personality;
- Acting as a member of the management board or enabling another person to perform this function or a similar function in a legal entity or an organisational unit without legal personality;
- Providing the registered office, registered address or correspondence address, as well as other related services to a legal entity or an organisational unit without legal personality;
- Acting or enabling another person to act as a trustee of a trust formed by way of a legal transaction;
- Acting or enabling another person to act as a person exercising rights attached to stocks or shares for an entity other than a company listed on a regulated market subject to requirements concerning disclosure of information in accordance with the law of the European Union or subject to equivalent international standards.
The obligation to obtain entry in the register of activities for companies or trusts does not apply to attorneys-at-law, advocates and the so-called legal companies (spółka prawnicza) referred to in Article 8 of the Act on Attorneys-at-Law and Article 4a of the Law on Advocate’s Profession.
Entry is made electronically at a request, within 14 days of the date of filing of the request to the Head of the Fiscal Administration Chamber in Katowice. The request has to have enclosed to it a statement on fulfillment of the conditions legally required to carry out activities for companies or trusts or a clean criminal record statement.
- Register of virtual currency activities
Register of virtual currency activities is a new register for entrepreneurs carrying out the so-called “virtual currency activities” (kept by the Head of the Fiscal Administration Chamber in Katowice, as well) which consist in:
- Exchange between virtual currencies and means of payment;
- Exchange between virtual currencies;
- Intermediation in the exchanges referred to above;
- Maintaining accounts enabling authorised persons to use virtual currency units, including conducting transactions to exchange them.
Additionally, the amendment to the AML Act imposes the following requirements on entrepreneurs carrying out activities for companies and trusts and entrepreneurs carrying out virtual currency activities:
- Requirement of clean criminal record including intentional offences: (i) against activities of state and local government institutions, (ii) against judicial authorities, (iii) against credibility of documents, (iv) against property, (v) against business transactions and financial interest in civil-law transactions, (vi) against trading in money and securities, (vii) offence of financing an offence of a terrorist nature, (viii) offence committed for a financial or personal gain or (ix) intentional fiscal offence;
- Requirement of having and documenting knowledge or experience related to the conducted regulated activities (it is sufficient to complete a suitable training or course, or at least for a year carry out actions related to activities for companies or trusts).
The above requirements apply to natural persons carrying out regulated activities, as well as members of governing bodies, persons managing performance of actions related to carrying out regulated activities and ultimate beneficial owners of legal entities or organisational units carrying out regulated activities, as well as shareholders of such entities, if such shareholders have been entrusted with running the company’s affairs or are authorised to represent the company.
Carrying out regulated activities without entry in the relevant register is subject to a financial penalty of up to PLN 100 000.
Important: The deadline for making an entry in the register of activities for companies or trusts by an entrepreneur who carried out such activities before 31 October 2021 expires on 30 April 2022, i.e. 6 months after the effective date of the provisions of the act.
On the other hand, entities which plan to commence such activities from 31 October 2021 or later on should obtain entry in the relevant register before actual commencement of such activities.
Central Register of Beneficial Owners (CRBO) – extended list of entities obliged to report information
The amendment to the AML Act introduces substantial changes in this respect. First of all, the list of entities obliged to report and update information in CRBO will be extended by:
- Trusts whose trustees or individuals holding equivalent positions have their place of residence or registered office in the Republic of Poland or enter into business relations or acquire properties in the Republic of Poland on behalf of or for the trust;
- European economic interest groupings;
- European companies;
- European cooperatives;
- Associations subject to entry in the National Court Register;
Important: The deadline for reporting existing entities to the CRBO is 3 months of the effective date of this provision, i.e. until 31 January 2022.
As regards the scope of information reported to the CRBO:
- It is no longer required to report all representatives (only information concerning the representative reporting a given entity will be collected);
- There is a new obligation of indicating all citizenships of the ultimate beneficial owner, as well as the member of the governing body and shareholder authorised to represent the company. So far, it was possible to indicate one citizenship only. If a person had multiple citizenships, including Polish citizenship, then according to the guidelines of the Ministry of Finance they had to provide information about Polish citizenship. On the other hand, in the case of multiple citizenships among which Polish citizenship was not included one had to indicate one citizenship at their discretion. The change applies not only to the entries made from 31 October 2021 onwards. The legislator also imposed an obligation on obliged entities to update information reported at an earlier stage, if any of the persons disclosed has other citizenships in addition to the one indicated in the report.
Important: An update in the above respect should be made until 30 April 2022.
New obligations for the ultimate beneficial owner – provision of information to the obliged entity
31 October 2021 was the effective date of the regulations obliging ultimate beneficial owners to provide the entity obliged to report information about beneficial owners or the trustee (or a person holding an equivalent position in trusts) with all information and documents necessary to report information to the CRBO.
Before the change all required data had to be determined by the person responsible for reporting information to the CRBO.
If the ultimate beneficial owner fails to perform their obligation to provide data required for registration, which will result in it being impossible to report information or update data by the statutory deadline, or provides data not complying with the facts, they will be subject to a financial penalty of up to PLN 50 000.
Important: The deadline for providing all information is 7 days of the date of entry of the entity in the National Court Register and introduction of changes or entry of the changes in the National Court Register (in the case of changes which require such entry in order to be effective).
Obligation of ultimate beneficial owner’s verification by the obliged entity
The key change introduced as part of the amendment to the AML Act is implementation of a mechanism for verifying the correctness and genuineness of information included in the CRBO. When examining its client, each obliged institution (e.g. a bank, notary, real estate agent, accounting firm) will have an obligation to analyse the CRBO data. If as part of such an analysis any discrepancies are found between the information collected in the CRBO and information about the client’s ultimate beneficial owner established by the obliged entity, then the obliged entity will have to explain the reasons for such discrepancies. If the discrepancies are confirmed, the obliged institution will provide information about the discrepancies to the relevant authority with the use of an ICT system with justification and documentation concerning the discrepancies. Additionally, the so-called cooperating units (central administration, local government authorities and other state organizational units, as well as the Polish Financial Supervision Authority, Supreme Audit Office, National Bank of Poland) will also be able to inform the authority competent for the CRBO about the discrepancies they identified. This authority will take actions aimed at clarifying the discrepancies. Moreover, the authority will be able to commence an action in order to explain if the information collected in the CRBO is correct and up-to-date. A suitable note on the commencement and conclusion of the explanatory procedure will be shown in the CRBO. The authority may also issue a decision on rectification of data in the CRBO.
Though the amendment to the AML Act does not provide for any sanctions for the obliged institutions for failure to perform the verification and reporting obligation as to the discrepancies in the CRBO, it nonetheless extends the list of sanctions imposed on the entities subject to obligatory entry in the CRBO by a financial penalty of up to PLN 1 000 000 for provision of information not complying with the facts. This is a significant change, since previously these entities were responsible for timeliness of the reports only rather than for correctness of reported information – in this respect potential liability (criminal for a false statement and civil for any damage) is on the part of the reporting individuals.
The amendment to the act is aimed at tightening the AML system and making the procedure for establishing identity of ultimate beneficial owners more effective. If you need any support in relation to making changes in the CRBO due to the amendment to the AML Act, please contact us.
Director of the Company Law Department
TGC Corporate Lawyers
See also: Liability of shareholders of a limited liability company