The Act on Combating Money Laundering and Terrorist Financing* (hereinafter referred to as the "AML Act") imposes numerous obligations on businesses related to the monitoring and analysis of transactions conducted by their customers. The obligation to comply with AML rests with many entities, classified as "obligated institutions," as defined in Article 2, Section 1 of the Act.
Large companies, employing even several hundred people, often have specialized departments to handle AML/CFT compliance tasks. For smaller entities, building their own team of compliance specialists usually proves too costly. Therefore, many entities are considering outsourcing AML/CFT responsibilities.
What is AML/CFT process outsourcing?
Outsourcing AML/CFT processes involves entrusting financial security tasks to external entities specializing in AML. This entity can be an individual, a legal entity, or an organizational unit without legal personality.
Under the AML Act, such outsourcing is possible. Therefore, obligated institutions do not have to cope with complex and often unclear requirements on their own and can, to an appropriate extent, seek assistance from external experts.
Importantly, entrustment can only occur pursuant to a written agreement. However, the legislature has not defined the specific legal relationship under which such entrustment may occur. Agency or outsourcing agreements are most often concluded for this purpose.
The scope of entrustment is broad and may cover, in principle, all financial security measures, including the analysis of transactions carried out, referred to in Article 43 paragraph 3 of the AML Act, or the verification of the beneficial owner.
Who is responsible for fulfilling AML/CFT obligations?
Entrusting the use of financial security measures does not relieve the obligated institution of responsibility for their application. Therefore, any irregularities committed by an external entity will be the responsibility of the obligated institution .
This article is for informational purposes only and does not constitute legal advice. 2337
Legal status as of October 5, 2022
*Journal of Laws of 2018, item 723, as amended
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