Money laundering and financing of terrorism - methods of counteracting

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Entrepreneurs running a business are obliged to comply with the obligations and formalities to which they are obliged by the legislator. Money laundering by entrepreneurs also does not escape the legislator, what obligations in the field of counteracting money laundering are imposed on them by the amended act on counteracting money laundering and financing terrorism?

Money laundering and terrorist financing - counteraction system

Amendment to the Act on Counteracting Money Laundering and Terrorism Financing of July 13, 2018. hereinafter referred to as the PPPFT Act, expands the catalog of institutions authorized and, above all, obliged to identify, assess and notify the risk of money laundering and terrorist financing occurring in transactions with clients, especially occasional ones. The analysis performed by the obliged entities is to obtain information on the purpose of clients for which they use the services and products offered by entities obliged to apply the PPPFT Act.

What entities have been included as obligated

In the PPPFT Act, the legislator also included entrepreneurs as entities obliged to control suspicious transactions of their clients, and more precisely, among others:

  1. entities operating in the field of bookkeeping services,
  2. entrepreneurs conducting exchange office activities and other entrepreneurs providing currency exchange services or intermediation services in currency exchange, which are not other obligated institutions, and branches of foreign entrepreneurs conducting such activities on the territory of the Republic of Poland,
  3. entrepreneurs within the meaning of the Act - the Law of entrepreneurs who are not other obligated institutions, providing services consisting in:
  1. creating a legal person or an organizational unit without legal personality,
  2. performing the function of a management board member or enabling another person to perform this function or a similar function in a legal person or an organizational unit without legal personality,
  3. providing a registered office, business address or correspondence address and other related services to a legal person or an organizational unit without legal personality,
  4. acting or enabling another person to act as a trustee of a trust established through legal action,
  5. acting or enabling another person to act as a person exercising rights in stocks or shares for an entity other than a company listed on a regulated market that is subject to disclosure requirements under European Union law or is subject to equivalent international standards,
  6. entities operating in the field of bookkeeping services,
  7. entrepreneurs within the meaning of the Act - Entrepreneurs Law to the extent that they accept or make payments for goods in cash with a value equal to or exceeding the equivalent of EUR 10,000, regardless of whether the transaction is carried out as a single operation or several operations that seem related to each other.

Each of the entities obliged by the legislator:

  1. appoints senior management responsible for the performance of statutory duties,
  2. appoints an employee holding a managerial position responsible for ensuring the compliance of the company's activities and its employees with the provisions of the PPPFT Act. The designated employee is also responsible for submitting notifications to the General Inspector of Financial Information on behalf of the company,

If the entrepreneur runs a sole proprietorship, then the tasks of the senior management and the employee are performed by the person conducting this activity.

What tasks are faced by obliged entities

In art. 33 of the PPPFT Act, the legislator obliges entities obliged to perform statutory obligations on PPPFT to apply financial security measures to their clients and to identify and assess the level of money laundering and terrorist financing risk related to economic relations or occasional transactions. The identified risks must be documented taking into account:

  • type of client,
  • geographic area,
  • purpose of the account,
  • type of products, services and methods of their distribution,
  • the level of property values ​​deposited by the client or the value of transactions carried out,
  • the purpose, regularity or duration of the business relationship.

What are security measures

The security measures that are required to be applied by the obliged entities are:

  1. identification of the client (or a person authorized to act on behalf of the client) and verification of his identity,
  2. identification of the beneficial owner and taking reasonable steps to verify his identity and establish the ownership and control structure - in the case of a client who is a legal person or an organizational unit without legal personality,
  3. assessment of business relationships and, if appropriate, obtaining information on their purpose and intended nature,
  4. ongoing monitoring of the client's business relations (analysis of the transaction in terms of the risk of money laundering, compliance as to the type of transaction, examination of the source of the client's property values, ensuring that the documents, data or information regarding the business relations are kept up-to-date.

By identifying the client, the legislator understands that arrangements have been made in the case of:

  1. a natural person:
  • name and surname,
  • citizenship,
  • PESEL number or date of birth - if no PESEL number has been issued, and the country of birth,
  • series and number of the document confirming the identity of the person,
  • address of residence - if this information is available to the obligated institution,
  • name (company), tax identification number and address of the main place of business - in the case of a natural person running a business,

2.a legal person or an organizational unit without legal personality:

  • (company) names,
  • organizational form,
  • registered office or business address,
  • NIP number, and in the absence of such a number - the state of registration, commercial register and the number and date of registration,
  • identification data of the person representing that legal person or an organizational unit without legal personality.

Importantly, the entrepreneur verifies the identity of the customer and the beneficial owner before establishing business relationships or conducting an occasional transaction.

When the obliged entities apply security measures

Entities obliged to fulfill the obligations under the PPPFT Act apply financial security measures in the case of:

  1. establishing business relations,
  2. conducting an occasional transaction:
    a. with the equivalent of EUR 15,000 or more, or
    b. which is a transfer of funds for an amount exceeding the equivalent of EUR 1,000

3.conducting an occasional cash transaction of the equivalent of EUR 10,000 or more,
4.bet and collect winnings of the equivalent of EUR 2,000 or more,
5.suspected money laundering or terrorist financing,
6. doubts as to the truthfulness or completeness of the customer identification data obtained so far.

Inability to apply security measures

If entrepreneurs obliged to apply the provisions of the PPPFT Act cannot apply one of the above-mentioned financial security measures then:

  1. do not establish economic relations,
  2. do not carry out an occasional transaction,
  3. do not carry out transactions via a bank account,
  4. dissolve economic relations.

Increased security measures

Entrepreneurs applying the PPPFT Act are required to activate enhanced financial security measures towards clients from or based in a high-risk third country.

The period of keeping the documentation

Entrepreneurs applying the PPPFT Act are obliged to store for a period of 5 years, counting from the first day of the year following the year in which the business relationship with the client ended or in which occasional transactions were concluded:

  1. copies of documents and information obtained as a result of applying financial security measures,
  2. evidence of transactions and records of transactions, including original documents or copies of documents necessary to identify the transaction.

Money laundering and terrorist financing - internal procedure for counteracting

Entrepreneurs applying the PPPFT Act must introduce the so-calledan internal procedure for the fulfillment of statutory obligations, taking into account the nature, type and size of the business, including:

  1. actions or actions taken to reduce the risk of money laundering,
  2. principles of identifying and assessing the risk of money laundering,
  3. measures used to properly manage the identified money laundering risk,
  4. rules for applying financial security measures,
  5. rules for keeping documents and information,
  6. rules for performing duties including providing the Inspector General with information on transactions and notifications,
  7. the rules of disseminating the knowledge of the provisions of the PPPFT Act among the employees of the obligated institution
  8. rules for reporting by employees actual or potential violations of the provisions of the PPPFT Act,
  9. principles of internal control.

Procedure for anonymous reporting of violations of statutory obligations on PPPFT

Entities obliged to apply the procedures of the PPPFT Act are responsible for developing and implementing an internal procedure for anonymous reporting by employees or other persons of potential violations of the provisions on counteracting money laundering and terrorist financing.