AML changes are already in force

AML changes are already in force

On May 14, 2021, an amendment to the Act on Counteracting Money Laundering and Terrorism Financing (hereinafter: "the Act") entered into force. This is the result of the need to implement the EU AML V directive.

Pursuant to the amended Act, additional entities will be included in the catalog of obligated institutions. Moreover, entrepreneurs should prepare for the application of further security measures in relations with their contractors.

The proposed changes, discussed in detail in the material available on Orlik & Partners Linkedin, published a few months ago, almost fully entered into force.

New obligations of real beneficiaries and disciplinary measures should be added to the already existing extended catalog of obligated institutions, as well as further statutory obligations and the enlarged group of entities subject to the obligation to report and update information to the Central Register of Real Beneficiaries ("CRBR").

New obligations for real beneficiaries

As a reminder, it should be noted that under the applicable Act, it is the management board of the company (or other entity) that is responsible for identifying the beneficial owners and reporting to the CRBR, and this entity is fully responsible (including criminally *) for providing the indicated data.

At the same time, in the current legal state, these entitites may be fined up to PLN 1,000,000 for failing to comply with the above obligation.

Considering the emerging difficulties with proper identification of the beneficial owner, the legislator proposes to involve the beneficiaries themselves in this process.

The amendment stipulates that the beneficial owners are obliged to provide the notifying entities with all information and documents necessary to submit the application.

Importantly, the amendment also introduces separate fines that can be imposed directly on the beneficial owner who fails to fulfill the indicated obligation, as a result of which the notification will not be made within the statutory deadline or will be inconsistent with the facts. The fine imposed on the real beneficiary may reach up to PLN 50.000.

Extending the liability of companies

The amendment also draws attention to a specific gap in the scope of liability of companies (and other entities) for providing data inconsistent with the facts, which has so far raised a number of doubts. The current Act indicates that a fine of up to PLN 1.000.000 is imposed on those entities that have not complied with the obligation to report information on beneficiaries within the statutory deadline.

In the new wording of the Act, it has already been explicitly emphasized that the sanction applies to both failure to comply with the obligation to report information and providing information that is inconsistent with the facts.

On the one hand, the new changes extend the responsibility of entities submitting data to the CRBR, and on the other, they introduce tools aimed at facilitating their access to relevant and up-to-date data. While a significant number of beneficiaries have so far cooperated with companies in providing relevant information, there has been no explicit statutory obligation. Its introduction may therefore discipline those beneficiaries who did not provide such data at all or with delay, thus protecting companies (and other obligated entities) against severe financial penalties.

The discussed changes are only one of the few that are proposed in the next amendment to the Act. The necessity to adjust the applicable provisions to EU regulations, as well as tightening the current system, will certainly lead to further expansion of the catalog of obligated institutions, introduction of further statutory obligations and  more disciplining tools to ensure their implementation.

* the person authorized to represent the entity that submits the notification to the CRBR is subject to criminal liability.