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Financial Institutions in Poland Face Heavy Penalties for AML Act Violations

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In a move to strengthen anti-money laundering (AML) and counter-terrorism financing (CTF) regulations, financial institutions in Poland are being urged to identify, assess, and monitor any risks arising from outsourcing arrangements.

Background

The European Banking Authority (EBA) guidelines emphasize the need for obliged institutions to notify or engage with supervisory authorities when planning to outsource critical or important functions. Failure to comply with AML Act obligations can result in severe administrative penalties.

Penalties for Violations

According to a recent report, failure to comply with AML Act obligations can result in fines ranging from PLN 1,000 to PLN 20,868,500 (approximately EUR 250,000 to EUR 5,000,000). The penalties can be imposed for various violations, including:

  • Failure to prepare a risk assessment on money laundering and terrorist financing
  • Failing to apply financial security measures
  • Lack of an internal procedure for anonymous reporting of anti-money laundering and counter-terrorist financing violations
  • Failure to provide notices of suspected money laundering or terrorist financing (SAR filings)
  • Non-compliance with disclosure obligations

Factors Considered in Penalty Imposition

The competent authority takes into account several factors when imposing a penalty, including:

  • Gravity and duration of the breach
  • Financial capacity of the obligated institution
  • Degree of cooperation with authorities

Additional Requirements

In addition to these penalties, obliged institutions are also required to report information on beneficial owners and update such information within 7 days from the date of entry in the National Court Register or change in data. Failure to comply can result in a fine of up to PLN 1,000,000.

Individual Penalties

Individuals performing management functions in obliged institutions, including members of senior management and employees responsible for supervising compliance, may also face penalties up to PLN 1,000,000 if the institution they manage is found to have violated AML Act obligations.

Proactive Approach to Outsourcing

Financial institutions in Poland are advised to take a proactive approach to outsourcing, ensuring that contracts include provisions for data protection and confidentiality. Additionally, institutions should maintain sufficient resources and capacity to control outsourced activities and ensure compliance with applicable laws, supervisory standards, and obligations under the outsourcing agreement.

Decision-Making Entity

The General Inspector for Financial Information, the President of the National Bank of Poland, and the Polish Financial Supervision Authority have the authority to impose administrative penalties for AML Act violations.

Key Recommendations

  • Identify, assess, and monitor risks arising from outsourcing arrangements
  • Notify or engage with supervisory authorities when planning to outsource critical or important functions
  • Maintain sufficient resources and capacity to control outsourced activities and ensure compliance with applicable laws, supervisory standards, and obligations under the outsourcing agreement
  • Report information on beneficial owners and update such information within 7 days from the date of entry in the National Court Register or change in data

Source

The article is based on the Polish AML Act and EBA guidelines. Specialist advice should be sought about specific circumstances.