Legal Alert – New regulations implementing the 4th AML Directive finally adopted

On 1 March 2018, the Parliament adopted a new law on anti- money laundering and terrorist financing (the New AML Act), which implements regulations of the Directive of the European Parliament and of the Council (EU) 2015/849 of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (commonly referred to as the 4th AML Directive).

The new regulations make the obliged entities implement appropriate changes to their internal regulations (including, e.g., new risk assessment rules, modified provisions on application of financial security measures) and adopt new regulations for the group. Most of the new AML regulations will enter into force 3 months after their publication in the Journal of Laws. The act includes also a number of transitional and adapting provisions.

The New AML Act implements a number of new solutions in order to strengthen and tighten up the legislation in the scope of anti- money laundering and terrorist financing (AML), facilitate a more effective tasks realizations in this area by the obliged entities, and also to improve coordination of controls conducted by entities cooperating with the General Inspector of Financial Information (e.g., Financial Supervision Commission).

Major changes

The most important changes resulting from the New AML Act apply, among others, to:

  • Creation of the Central Register of Beneficial Owners, containing information about beneficial owners of legal persons and other legal entities;
  • Imposing on all the commercial companies, save for professional partnerships and public companies, an obligation to provide information to be processed in the Central Register of Beneficial Owners; thus, the new AML Act covers also entities other than the obliged entities;
  • Extension of the obliged entities catalogue to cover, among others, loan corporations and entities providing services of creation of legal persons and providing a registered office or address for the purposes of running business activity, or a mailing address;
  • Significant modifications of the beneficial owner definition and introduction of an obligation to identify the beneficial owner (not only to make efforts to identify them);
  • Introduction of a three-stage assessment of the risk of money laundering and terrorism financing (on the European, national and institutional level);
  • Change of the rules of applying financial security measures (simplified and increased) by the obliged entities, and derogating from the application of financial security measures;
  • Introduction of an obligation to take specified actions with regard to the politically exposed persons (PEP), who no longer hold their position, and with regard to the PEP’s family;
  • Change of assessment principles applicable to systems of counteracting money laundering and terrorism financing of third countries (abandonment of the so-called “equivalent states” list);
  • Introduction of an obligation to have procedures in the field of money laundering and terrorist financing on the group level;
  • Extension of the catalogue of sanctions imposed on obliged entities for the violation of obligations relating to counteracting money laundering and terrorist financing, as well as extension of the catalogue of violations subject to sanctions.

Administrative sanctions

The new AML Act provides for sanctions for violation of obligations related to counteracting money laundering and terrorism financing, such sanctions including an order for an obligated entity to desist from the performance of certain activities, withdrawal of concessions and permits for the business, or deletion from the regulated activities register and cash penalties. Entirely new is the concept of publication in the Public Information Newsletter of information about the obliged entity that infringed the regulations and the scope of the violation.

Cash penalties, which may be imposed on obliged entities, have grown considerably as compared to the regulations applicable so far. According to the new regulations, the penalties may be as high as an equivalent of 5 million euros or 10% of the entity or group turnover (if the institution submits consolidated financial statements).

The Law Firm D. Dobkowski offers you comprehensive assistance in the area of the new AML regulations, including in particular:

Analysis of the obliged entity’s status in order to identify its obligations under the New AML Act;

  • Definition of the scope of indispensable changes in the internal AML procedures;
  • Assistance in preparing or changing internal regulations and group regulations adjusted to new AML Act requirements;
  • Conduct of legal audit in companies in order to evaluate the range and manner of realization of the notification obligation towards the Central Register of Beneficial Owners;
  • Representation of the obliged entities before the supervisory authorities.