The recent implementation of the AML V Directive to the Polish Act on Counteracting Money Laundering and Terrorist Financing will have a significant impact on business and the approach taken by state bodies to certain transactions. The main changes are as follows:
1. List of obliged institutions
The list of institutions obliged to report certain information to relevant authorities has been extended to:
1.1 entrepreneurs providing services, including tax, customs advisory, e.g. keeping tax books, preparing tax forms. It is worth noting that they do not have to be licensed as tax advisors or auditors to be classified as an obliged institution. Tax law enables third parties to act as attorneys-in-fact. Such attorneys-in-fact may as well be deemed as obliged institutions;
1.2 real estate agents (excluding real estate brokers where the rent for property lease is less than EUR 10,000 per month);
1.3 entrepreneurs who trade artwork or antiques, also in art galleries when the transaction exceeds or equals EUR 10,000 (as a single operation or as several operations that appear to be related).
2. Central Register of Beneficial Owners and additional KYC precautions
As of 31 October 2021 certain types of entities will be obliged to submit and update information on their beneficial owners to the Central Register of Beneficial Owners (the "CRBO"), i.e. foundations, associations required to register with the National Court Register, trusts, professional partnerships, European companies and cooperatives. Failure to comply with this obligation may lead to an administrative fine of up to PLN 1m (approx. EUR 220,000).
The amended law introduced new precautions pertaining to daily conduct and business transactions, such as gathering additional data about business partners, providing information about sources of income, documenting changes in customer structure, and documenting any obstacles to the KYC process. In addition, the verification of the beneficial owner cannot rely solely on verification in the CRBO, and the procedure for clarifying discrepancies between the client's CRBO and the result of the obliged institution's own verification has been defined. Those changes will be in force as of 31 October 2021.
3. New registers
As of 31 October 2021 there will be two new registers: (i) the register of cryptocurrencies (virtual currencies) and (ii) the register of entities acting on behalf of companies and trusts (the "Registers").
Entities providing the following services will need to be entered in the register of cryptocurrencies: (i) exchange between virtual currencies and means of payment; (ii) exchange between virtual currencies; (iii) intermediation in the exchange referred to above; and (iv) maintaining accounts understood as an electronically maintained set of identification data providing authorised persons with the ability to use virtual currency units, including conducting transactions to exchange them.
Entities providing services for companies and trusts will be subject to registration obligations as well. Such services include assistance in forming a company, membership in the management board, provision of correspondence address or similar services, assistance or acting as a person exercising rights from shares. Legal advisors, advocates and their partnerships will be exempted from this obligation.
Please bear in mind that persons validly convicted of any type of crime against finances, official authorities or documentation cannot be the managers or the beneficial owners of entities providing services related to cryptocurrencies or for companies/trusts.
The Registers will be maintained and supervised by the Polish Ministry of Finance. In case of non-compliance with the new regulations, an obliged entity may face administrative fines up to PLN 100,000 (approx. EUR 22,000).
Companies already operating on the Polish market and providing services connected with virtual currencies or services for companies and trusts will have a six-month period from 31 October 2021 to comply with the new obligations and requirements.
At present it is difficult to assess the effectiveness of the new regulations and the relevant authorities' approach to their application. However, we recommend looking into the recent amendments, especially if your services may be covered by the new laws.