The AML/CTF Act imposes a new duty on businesses and hefty fines for non-compliance. At the same time, the administration offers no opportunity to comply.
31 October 2021 was the effective date of another round of changes to the AML/CTF Act of 1 March 2018. Initially, the new law does not raise major concerns. Apparently, it is enough to know it and comply with it. But it turns out that, when it comes to practical implementation, the new regulations become troublesome. Are those regulated by the AML/CTF Act aware of the traps?
As amended, the AML/CTF Act imposes certain new duties on obliged institutions, including the duty to:
– record discrepancies between information reported to the Central Register of Beneficial Owners (CRBR) and the findings of the institution’s own beneficial owner test as applied to its customer;
– actively investigate the reasons for any such discrepancies;
– report any identified discrepancies to the relevant minister.
With that said, the regulations on testing for beneficial owners continue to be unclear and become difficult to apply in practice with complicated ownership structures. Then there are issues with the compatibility of the law with the IT system that has been designed to facilitate compliance.
The Finance Ministry has offered some guidance in the form of an on-line FAQ section at www.gov.pl. Unfortunately, that, too, does not resolve all the doubts. And the guidance is updated with substantial delays, comparing to when problems or changes appear.
The Finance Ministry expressly states that it is an exclusive responsibility of the obliged entity to establish its beneficial owners through appropriate analysis and assessment of the factual and legal configuration. The authorities add that the statutory beneficial owner definition in Article 2(2)(1) of the AML/CTF Act is an open-ended list. All that generates truly chaotic interpretations as to the beneficial owner definition.
On the one hand, obliged entities are required to make disclosures according to their own knowledge and intuition based not only on the law but also on the facts (including, for example, personal relationships among individuals within their corporate ownership structure). On the other hand, obliged institutions must make their own investigations to verify if their customers’ disclosures are correct.
The article is also available in Rzeczpospolita on-line.