Financial Crime World

Minister of Public Finance Orders Halt on Action Against Politically Exposed Persons

===========================================================

In an effort to strengthen anti-money laundering measures, the Minister of Public Finance has issued a directive ordering obligated institutions to cease certain actions against Politically Exposed Persons (PEPs).

Prohibition on Actions

The order, effective immediately, prohibits obligated institutions from taking the following actions:

  • Withdrawal of concessions or permits
  • Removal from the register of regulated activities
  • Prohibition on a person responsible for a violation of the Act by an obligated institution from performing duties in a managerial position for a period not exceeding one year
  • Fines

Preventing Misuse and Ensuring Compliance

The order aims to prevent the misuse of PEP status and ensure that obligated institutions take adequate measures to mitigate money laundering and terrorist financing risks associated with these individuals.

Who are Politically Exposed Persons?

According to the Polish Anti-Money Laundering Law, PEPs are natural persons who hold significant public functions or occupy significant public positions. The circle of PEPs does not include middle- or lower-level officials.

Obligated institutions must determine whether their customers or beneficial owners are PEPs and apply additional financial security measures accordingly. While Polish law does not prohibit the provision of services to clients with PEP status, obligated institutions must take extra precautions to mitigate risks.

AML Procedures for PEP

The Minister’s order emphasizes that obligated institutions should apply AML procedures to both current and former PEPs. For a period of at least 12 months after ceasing to hold a PEP position, obligated institutions must apply measures to account for the associated risk.

To verify clients’ status as PEPs, obligated institutions can use:

  • Statements from clients
  • Analysis of commercial databases
  • Examination of publicly available records
  • Information from other sources

Senior management approval is required to enter into or continue business relationships with PEPs, and documentation of such approval must be maintained.

Verification of Beneficial Owners

In addition to AML procedures for PEPs, the Minister’s order highlights the importance of verifying beneficial owners (UBOs) of clients. Obligated institutions must identify and verify UBOs by:

  • Name and surname
  • Nationality
  • Personal identification number
  • Date and country of birth
  • Identity document series and number
  • Address of residence
  • Business activity details

The order also emphasizes the need for obligated institutions to put in place procedures for noting discrepancies between information collected in the Central Register of Beneficial Owners and established information about a customer’s beneficial owner. A system for taking action to resolve such discrepancies must also be implemented.

Consequences

Failure to comply with the Minister’s order may result in penalties, fines, or other consequences. Obligated institutions are advised to review their procedures and ensure compliance with the updated regulations.

Conclusion

The order is seen as a significant step towards strengthening anti-money laundering measures in Poland and ensuring that obligated institutions take adequate precautions to mitigate risks associated with Politically Exposed Persons.