Liable person under the AML
In the first place, liable persons are credit and other financial institutions and their intermediaries, providers of ready-made companies, nominee and registered office services, or persons trading with used goods or receiving goods in pledge (typically bazaars and pawnshops).
While these entities are more or less conscious of their obligations under AML, most entrepreneurs have no idea that they too are liable persons whenever they receive cash of EUR 15,000 or more, regardless of their line of business. Moreover, the amounts (advance payments, instalments, etc.) received in connection with one transaction are aggregated.
Obligations under the AML
All of these persons have several key obligations. In particular, the client must be identified if the amount of the trade exceeds EUR 1,000. The identification obligation arises irrespective of the amount when the transaction is suspicious; for example, when a client transfers property without an explicit economic reason or withdraws or transfers money immediately after cash is deposited. The identification of a company is done by submitting an extract from the Commercial Register or other evidence of its existence.
In specific cases the client must be checked, in particular when the value of the business exceeds EUR 15,000, the transaction is suspicious or at the beginning of a business relationship. The check relates inter alia to the purpose and nature of the business or source of funds. The check must be carried out to the degree necessary to assess the extent of the risk of money laundering for the type of client or the business relationship.
A suspicious trade must be notified within five days.
Since 1 January 2012, ACLLE regulates the criminal liability of companies. A crime by a company is an offence committed (i) in its name, interest or within the scope of its activity committed by the statutory body or other person entitled to act on behalf of or in the name of the company, or (ii) by a person carrying out management or supervisory activity, or exercising a decisive influence on the management of the company. In some cases, the company is criminally liable for the acts of its employees.
The criminal liability also covers the offence of money laundering, which means obscuring the origin or otherwise seeking to make it substantially more difficult or impossible to identify the origin of things acquired through the offence, or as a reward for it, or a thing acquired for such thing. Those who enable others to commit this offence are also liable.
Problematic link between the ACLLE and AML
The biggest problem is the mentioned criminal liability for acts of employees in connection with the possibility of committing money laundering, also by negligence – especially because it is difficult for big companies to control.
An employee’s offence is attributable to a company if (i) it is committed by an employee acting on the basis of instructions or (ii) the company did not take measures it should have taken pursuant to a law or which could be reasonably required.
The latter applies in particular if the company’s bodies did not check employees’ activity or if they did not take necessary measures to prevent or avert the consequences of an already committed crime. Under the AML, this means the duty to establish and implement internal control and communication procedures, such as system of internal principles, procedures and control measures, including yearly trainings of employees.
Legal consequences of breach of anti-money laundering obligations
Failure to meet the obligations set out by the AML may be sanctioned by up to CZK 50,000,000. If a company is found criminally liable, a fine or ban on activities may be imposed. In worst case scenario, forfeiture of property or cancellation of the company.
These sanctions can seriously affect the existence of a legal entity. It is therefore clear that without taking sufficient measures to adopt internal controls and internal regulations, breach of legal obligations and consequent sanctions may very easily ensue.
Most entrepreneurs have no idea that they too are liable persons whenever they receive cash of EUR 15,000 or more, regardless of their line of business.