Changes in regulations
The obligation of maintaining compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act (the “AML Act”) by entities providing services of keeping accounting records results from the amended AML Act of 25 June 2009. In addition to a number of other changes, the amendment extends the list of entities that are subject to the requirements set forth by the new AML Act, including entities providing accounting services.
Another change affecting accounting firms arises from the Act of 9 May 2014 on simplifying access to certain regulated professions. Since its coming into force (on 10 August 2014), individuals who provide services of keeping accounting records have been required to meet the following criteria:
- They have to have full capacity to enter into transactions; they cannot have any criminal record listing valid sentences for offences against reliability of documents, property, licit economy, money and security circulation, tax offences and the offences referred to in chapter 9; and
- They have to have valid third-party insurance in place.
Consequently, an accounting licence in not obligatory for individuals providing accounting services.
Extended list of entities being subject to requirements of the AML Act
The broadening of the scope of requirements of AML provisions and deregulation of the profession of the accountant have resulted in an increase in the number of entities required to implement and follow the guidelines of the AML Act. Even though some time has passed since the Act became binding, we can still see remarkable interest from firms providing accounting services in receiving support in this area. In Poland, the interest in AML is also a result of the country’s leading position with respect to provision of accounting services in Central and Eastern Europe. Each year several new shared services centres are added to Poland’s business landscape. Since they provide accounting services to international corporations, they are subject to the certain obligations under the AML Act.
The duties of entities providing bookkeeping services in accordance with the AML Act can be divided into a few areas.
Entities providing bookkeeping services as well as other entities that are subject to the AML Act, are required to implement a written procedure, in particular with regard to implementation of financial safety measures, transaction records, risk analysis and assessment, disclosures to the General Inspector of Financial Information (GIIF), politically exposed persons (PEP) and storage of information.
Appointment of individuals ensuring compliance with requirements of AML Act
Institutions that are subject to the AML Act, including accounting firms, should appoint a person responsible for ensuring compliance with the Act. As regards sole traders, the liable person is the business owner himself. As regards companies, cooperative and national banks, responsibility in this respect lies with a board member. In branches of foreign banks compliance is ensured by the head of the branch.
Pursuant to the AML Act, accounting firms have to keep records of so-called suspicious transactions, i.e. where circumstances suggest that the transactions may involve money-laundering or financing of terrorism. Such transactions have to be registered irrespective of their value. How can a firm accounting for transactions become suspicious of money-laundering or financing of terrorism? The relevant analysis should be based on the criteria set forth in Art. 10.3 of the AML Act, i.e. economic, geographic, behavioural and material.
At the same time, the requirement provided in Art. 8.1 of the AML Act regarding registration of transactions with a value in excess of EUR 15,000 (one or a few related transactions) is binding directly on “institutions conducting the transaction”, namely (pursuant to Art. 2.1e of the AML Act) institutions providing services to or carrying out a client’s order. The provision mainly applies to credit institutions, financial institutions and banks. Thus, insofar as the accounting firm is not providing a service or carrying out a customer’s order with a value greater than EUR 15,000 or if it does not receive any consideration for the accounting services in cash (thus meeting the definition set forth by Art. 2.1.t of the AML Act, i.e. an entrepreneur accepting cash payment equal to or in excess of EUR 15,000), it does not have to register transactions exceeding the aforesaid limit.
Use of financial safety measures and risk analysis
The AML Act prescribes financial safety measures to be applied to clients of institutions that are subject to the requirements. The scope of the measures should depend on risk assessment. Financial safety measures consist of the following:
- Identification of the client and verification of its identity;
- Identification of the actual beneficiary and verification of its identity using due care;
- Obtaining information about the purpose and character of the client’s business relations;
- Ongoing monitoring of business relations with the client, including review of the transactions concluded to ensure that the transactions comply with the information about the obliged institution’s information about the client, its business activity, risk assessment, and if possible, checking the source of its assets and updating the existing information on an ongoing basis.
The AML Act requires that financial safety measures be used on all levels of relationships with clients, i.e.:
- Signing of an agreement with the client;
- Execution of transactions with the client with a value in excess of EUR 15,000; if there is a suspicion of money-laundering or financing of terrorism, regardless of the transaction value;
- When there is doubt as to the validity or completeness of the client data.
Entities providing bookkeeping services often ask whether it is obligatory to apply financial safety measures also to the clients of their own clients who are parties to the business transactions accounted for. It is our understanding that pursuant to the provisions of the AML Act, entities providing accounting services are required to apply financial safety measures to their immediate clients, i.e. parties with whom they sign agreements for the provisions of accounting services.
Disclosures to the General Inspector of Financial Information (GIIF)
The accounting service providers’ obligation of making disclosures to GIIF includes disclosure of information on registered suspicious transactions without any delay. The information disclosed consists of data from the register of transactions. Information disclosed to GIIF should include: transaction date, data of the parties to the transaction, transaction amount, transaction currency and type, account numbers for transactions where such accounts are used, justification, place and date of order placement. In addition, disclosures should include any information about suspicious transactions that the entity may have, e.g. personal or business account numbers that are not used in the reported transaction.
Obliged institutions, including accounting service providers, have to keep transaction records, information and documents related to transactions as well as transaction analysis results covering a period of five years starting on the first day of the year after the year in which the transaction was closed.
The aforementioned requirements should be considered only as guidelines on the obligations imposed by the AML Act on entities providing bookkeeping services. Each entity should follow its own detailed requirements that take into account the character of the entity’s own processes, systems, organisational structure and financial capability.
We know from the experience of working with our clients that the provisions of the AML Act can raise a lot of interpretation doubts. The most frequent ones include the sufficiency and adequacy of measures taken by entities to maintain compliance with the AML Act, the minimum scope of information about clients and actual beneficiaries, as well as quick ways of showing compliance with the Act during compliance audits. Please also remember that accounting firms should adapt to the requirements of the Fourth AML Directive which will be officially implemented in Poland soon.
We have already written about the changes arising from the 4 AML Directive:
- Effects of amendments to AML regulations under harmonization with EU law
- 4th AML Directive: key amendments to regulations
The full text of the 4th AML Directive is available here:
- Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing