AML – it’s worth taking care of compliance

What is AML?

AML stands for anti-money laundering and refers to all actions that obligated entities must take to minimise the risk of money laundering within their organisation. In Poland, AML regulations are governed by the Act on Counteracting Money Laundering and Terrorist Financing, which implements Directive (EU) 2018/843 of the European Parliament and of the Council, known as the Fifth AML Directive (AML V).

Who does the AML procedure apply to?

The list of so-called obligated institutions, i.e., entities required to implement the AML procedure, is extensive and continues to grow. For instance, since April 2021, accounting offices — regardless of their scope of activity or turnover — have been considered obligated entities. Even small accounting firms run as sole proprietorships are now required to implement AML procedures. Experts warn that under the direction of EU legislation, the scope of obligated institutions will continue to expand.

For many businesses, this is the last call to comply with new regulations and implement the appropriate measures. Preparing and implementing an effective AML procedure is time-consuming, and the many reporting and control obligations mean mistakes are easy to make. Meanwhile, financial supervisory authorities can already verify the existence of an AML procedure and check compliance with the relevant regulations, as well as request appropriate documentation. Non-compliance may result in severe penalties.

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Under the current legal framework, the following are required to implement AML procedures:

• banks,
• credit unions,
• payment institutions,
• investment firms,
• brokerage houses,
• investment funds,
• insurance companies,
• insurance intermediaries,
• currency exchange offices,
• entities providing services of exchanging or intermediating in the exchange between virtual currencies and fiat currencies, and entities maintaining accounts for such currencies,
• notaries,
• solicitors and legal advisers (except when employed under an employment contract),
• tax advisers and entrepreneurs providing similar services,
• sole traders and persons holding management positions in limited liability companies under management contracts,
• entities providing bookkeeping services,
• real estate agents (for transactions with rent equal to or exceeding 10,000 euros),
• postal operators,
• gaming salons,
• entrepreneurs, foundations and associations insofar as they receive or make payments for goods in cash equal to or exceeding the equivalent of 10,000 euros (whether in a single transaction or several related ones),
• entrepreneurs offering safe deposit boxes,
• art, antiques and collectibles dealers and intermediaries,
• lending institutions.

Beware of ready-made AML procedures

Many websites offer templates and ready-made documents intended for risk assessment or even for implementing an entire AML procedure. However, the law clearly states that an internal procedure for anti-money laundering and terrorist financing must be implemented with consideration of the nature, type and scale of the business activity. During inspections by financial authorities, what will be assessed is the actual application of the procedure and fulfilment of duties by the entity — not merely possession of templates.

Penalties related to AML

If an inspection results in a negative outcome, the Act provides for sanctions not only against entities that fail to fulfil their AML obligations, but also those that do so improperly.

Some of the penalties for breaching AML regulations include:

• publication of information about the obligated institution and the scope of the breach on the Public Information Bulletin,
• an order to cease specific activities undertaken by the obligated institution,
• revocation of licences or permits for business activity,
• removal from the register of regulated activities, if the institution was previously registered,
• a ban on holding managerial positions for individuals responsible for the breach committed within the obligated institution,
• a financial penalty of twice the amount of the benefit gained or loss avoided, or if this cannot be determined – up to EUR 1,000,000. In some cases, the penalty may reach up to PLN 20,868,500 for individuals and up to EUR 5 million for other entities;
• personal material liability of management board members, up to PLN 1,000,000

In certain cases, the regulations also provide for criminal liability.

If your business is listed above or you suspect that AML regulations may apply to you — don’t take the risk! Contact the experts at ATL Law Anna Błaszak Legal Advisor Office and learn more about our comprehensive AML compliance services. We will prepare a solution tailored to your business type. We offer proven methods and many years of experience in the field of compliance.