Financial Crime World

Poland Struggles to Comply with EU’s Anti-Money Laundering Directive 5 (AMLD5)

Despite the European Union’s efforts to strengthen its anti-money laundering and counter-terrorism financing frameworks, Poland is still grappling with compliance issues. The country’s financial institutions are facing significant challenges in implementing the EU’s updated regulations, known as AMLD5.

Key Areas of Concern

  • Mitigation of Anonymous Parties: Cryptocurrency products pose a challenge due to their inherent anonymity. To tackle this issue, AMLD5 requires financial institutions to perform customer due diligence on all transactions, regardless of the amount.
  • Prepaid Cards: The new regulation has lowered the threshold for prepaid card transactions subject to customer due diligence from EUR 250 to EUR 150. Additionally, the use of prepaid cards issued outside the EU will be prohibited unless they were issued in a country that enforces an equivalency of AMLD5.

Challenges Faced by Financial Institutions

  • Cryptocurrency Exchanges and Wallets: These entities must register with their respective financial authorities and perform customer due diligence, monitor behavior, and report suspicious activity. Failure to comply could result in severe penalties and reputational damage.
  • Politically Exposed Persons (PEPs): The country’s government has been requested to issue a list of PEPs, which will be used to identify higher-risk individuals. Financial institutions must monitor the activities of these individuals and update their risk profiles accordingly.

Impact on Specific Industries

  • Art Dealers: Art dealers in Poland are also feeling the impact of AMLD5, as they must now report suspicious activity and perform customer due diligence checks for transactions exceeding EUR 10,000.
  • Banks and Financial Institutions: The European Commission’s list of high-risk third countries is causing significant challenges for Poland’s financial institutions. Banks and other entities covered by AMLD5 are required to increase due diligence on operations involving these countries to more effectively identify suspicious activity.

Conclusion

Poland’s financial institutions are facing significant challenges in complying with the EU’s anti-money laundering regulations. The country will need to take swift action to ensure that its financial sector is fully compliant with AMLD5 to avoid reputational damage and potential penalties.