Financial Crime World

Financial Crime Takes Center Stage in Poland: A Shift in Law Enforcement Focus

In recent times, Poland has seen a significant shift in law enforcement agencies’ focus areas. Gone are the days when sanctions compliance, environmental protection matters, money laundering, and bribery-related inquiries were merely an afterthought; these have now become the primary areas of concern for authorities.

Dawn Raids and Investigations: A New Reality for In-House Counsel

Law enforcement agencies, including the Office of Competition and Consumer Protection, have been at the forefront of conducting dawn raids and investigations. This has put in-house counsel under pressure to provide explanations or depositions to the authorities while navigating complex procedures.

  • Increased Involvement of In-House Legal Teams: Responding to cybersecurity incidents, data leaks, and frauds requires meticulous reporting and liaison with law enforcement agencies, often following internal investigations.
  • Robust Compliance Environment: Companies are under pressure to update their procurement procedures and provide training within their organizations.
  • Amendments to the Country’s Criminal Law: Significant amendments were introduced in 2023, tightening penalties for all types of white-collar crimes and exposing individuals and companies to both imprisonment and fines.

New Offense Added: Obstructing Private Tenders

A new offense has been added to the books – obstructing private tenders – which includes various forms of collusion. This presents a substantial challenge for in-house legal teams, who must now update their compliance procedures and ensure transparency and fairness in procurement processes.

Shareholders Gain New Rights

Shareholders have also gained a new right to report situations where management action puts the company at risk of financial loss, requesting prosecution by the prosecutor’s office. For instance, if a company is exposed to a financial penalty exceeding circa EUR45,000, this can trigger a shareholder reporting right and initiate a criminal investigation.

Challenges for Companies

Internal investigations continue to pose significant challenges for companies, including:

  • Data/Privacy Protection: Protecting data during an investigation while balancing the need for transparency.
  • Conflict of Interest: Who should commission an internal investigation (often the management of the entity may have a conflict of interest).
  • Protecting Whistleblowers: Ensuring the safety and protection of whistleblowers.

Future Developments in 2024

The Polish Financial Supervision Authority (PFSA) is anticipated to initiate more investigations, focusing on market abuse, manipulation, and insider trading. With nearly 1000 listed companies in Poland subject to scrutiny, as well as financial service providers and institutional and individual investors, the PFSA has declared detecting and combating financial irregularities on the market its top priority.

Impending Changes

The impending change of government in Poland is also expected to lead to extensive investigations concerning state-owned entities, potentially affecting public-private partnerships and transactions/projects involving companies controlled by the government and their counterparties. The EU Whistleblowing Directive is also expected to be implemented, which may lead to an increase in reports being made internally or externally by employees, followed by imminent follow-up actions by authorities.

Protecting Identity of Whistleblowers

Protecting the identity of whistleblowers and dealing with fake or unfounded reports will be a significant challenge for internal compliance and legal departments.