The topic of counteracting money laundering and terrorism financing has been controversial in public opinion for years and is a subject of interest in many branches of law. The scale of this phenomenon is growing year by year. This practice encompasses virtually the entire globe, and its consequences are devastating for the global economy, as well as the economies of individual countries and regions. This phenomenon primarily fosters the development of organized crime and corruption. It also weakens the functioning of financial institutions and leads to a slowdown in the development of economic markets.
Combating money laundering is therefore of paramount importance to national economies. Therefore, eliminating this problem is increasingly becoming a key goal for governments around the world and international organizations, which are taking steps to prevent criminal activity in this area.
What is AML?
AML, short for "Anti-Money Laundering," refers to activities undertaken by international and state institutions, organizations, businesses, and individuals to counteract money laundering. This most often involves money or other assets obtained from illegal sources, such as drug trafficking, illegal weapons trafficking, currency counterfeiting, financial fraud, human and organ trafficking, prostitution, and gambling. Activities undertaken in this area are primarily aimed at securing financial systems from being used for criminal activities.
What is money laundering?
Without a doubt, the term "money laundering" is crucial to the discussion of this article. It is widely accepted that this term originated and came into use during the era of Prohibition in the United States, introduced by the 18th Amendment to the U.S. Constitution. Organized crime groups reaped enormous profits from the illegal production, sale, and smuggling of alcoholic beverages, gambling, and prostitution, while the official source of their members' income was trade and service activities, in which it was very easy to conceal the true turnover. Illegal income was recorded as income from the sale of goods and services. In this way, "dirty" money, along with legal profits, was taxed and then, as "clean" money, returned to circulation[1].
According to the definition formulated in the European Parliament document [2] , money laundering is all activities aimed at concealing the illegal sources of financial resources and giving them the appearance of legality in order to enable their reinvestment in legal economic transactions [3] .
Legal solutions in force in Poland
The provisions of national and European Union law are of key importance for the Polish system of counteracting money laundering and terrorism financing. The basic legal act in this area is Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC (hereinafter referred to as the "IV AML Directive"), subsequently amended by Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, and amending Directives 2009/138/EC and 2013/36/EU, hereinafter referred to as the "5th AML Directive", as well as the Act of 1 March 2018 on counteracting money laundering and terrorism financing (Journal of Laws of 2018, item 723, as amended), which indicates the authorities and entities operating within this system and defines their obligations and powers, implementing appropriate solutions resulting from Community law.
The Act on Combating Money Laundering and Terrorist Financing imposes numerous obligations on businesses related to monitoring and analyzing transactions conducted by their customers. The obligation to comply with AML rests with numerous entities classified as "obligated institutions," as defined in Article 2, Section 1 of the Act. These primarily include all financial entities such as banks, insurers, and investment funds, but also credit intermediaries, real estate agencies, car dealers, tax advisors, and currency exchange firms.
Failure to comply with statutory obligations by an "obligated institution" may result in the imposition of an administrative penalty on the audited entity, including a substantial fine, revocation of a license or permit, or deletion of the entity from the register of regulated activities. It is worth noting that violations of anti-money laundering requirements may result not only in administrative penalties but also in criminal sanctions under the Act on Combating Money Laundering and Terrorist Financing and the Penal Code.
To ensure proper implementation of AML obligations, it's worth seeking professional assistance to implement the procedures required by the Act. Our law firm has extensive experience in implementing AML procedures in obligated institutions, and we have provided our services to micro, small, medium, and large enterprises.
Thank you for reading our post today, we invite you to the next one next Thursday, we will publish an entry about trademarks - what exactly are they and what legal protection measures can we take to protect them?
[1] Z. Piotrowska, Chapter 1 LEGAL FOUNDATIONS FOR COUNTERACTING MONEY LAUNDERING AND TERRORISM FINANCING [in:] Counteracting money laundering and terrorism financing. A practical guide , ed. W. Kapica, (no registered office) 2018.
[2] S. Iacolino, Working document on money laundering, PE504.311, p. 2 http://www.europarl.europa.eu/meetdocs/2009_2014/documents/crim/dt/925/925991/925991en.pdf
[3] M. Mazur, Penalization of Money Laundering, Warsaw 2014, p. 6.
This post does not constitute legal advice.
