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Outsourcing and AML/CFT Obligations: Key Considerations for Financial Institutions

Introduction

Warsaw, Poland - As financial institutions operating under the Polish Financial Supervisory Authority (KNF) continue to explore outsourcing arrangements to optimize their operations and reduce costs, it is crucial that they comply with Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) obligations. A recent Position Paper by the KNF highlights key considerations for financial institutions when outsourcing certain activities.

Outsourcing Arrangements

The KNF emphasizes that outsourcing arrangements must be carefully designed to ensure that AML/CFT obligations are not compromised. Financial institutions must conduct thorough due diligence on their outsourcing partners, including:

  • Verification of their reputation
  • Verification of their experience
  • Verification of compliance with relevant regulations

AML/CFT Obligations

Financial institutions operating under the Polish AML Act are subject to a range of obligations, including:

  • Reporting information on beneficial owners and updating such information within 7 days from changes
  • Providing all necessary information and documents for notification/ updating to the Central Register of Beneficial Owners (CRBR)
  • Conducting enhanced due diligence on customers and business relationships

Failure to comply with these obligations may result in administrative penalties, including:

  • Publication of information on the institution and scope of violation in the Public Information Bulletin
  • Order to stop specific actions
  • Withdrawal of concession or permit
  • Prohibition from performing duties in a managerial position for up to one year
  • Pecuniary penalty (up to twice the amount of benefit gained or loss avoided, with a maximum of EUR 1,000,000)

Penalties for Beneficial Owners

Beneficial owners who fail to provide necessary information and documents may be subject to fines of up to PLN 50,000. Similarly, entities conducting activities without proper registration may face penalties of up to PLN 100,000.

Penalties for Persons Responsible for Compliance

Members of senior management, persons responsible for implementing AML/CFT obligations, and employees responsible for supervising compliance may be fined up to PLN 1,000,000 if an institution they manage is found to have violated AML/CFT obligations.

Conclusion

In conclusion, financial institutions operating under the KNF must carefully consider AML/CFT obligations when outsourcing activities. Failure to comply with these obligations may result in significant administrative penalties. It is essential that institutions seek specialist advice on their specific circumstances to ensure compliance with Polish regulations.

About the Author

[Name], a seasoned journalist, has been covering financial and regulatory issues for [Publication Name] for over five years. She holds a degree in Finance from the Warsaw School of Economics and has extensive experience in reporting on AML/CFT matters.

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