On April 30, 2018, an amendment to the Act on Combating Money Laundering and Terrorist Financing (hereinafter referred to as the Amending Act) was announced. The changes are related to the 5th AML Directive, published in June 2018. The directive was intended to increase the transparency of financial flows within the financial system, and consequently, to enhance the effectiveness of authorities responsible for detecting funds originating from criminal activities or used to finance terrorist activities.*

The solutions included in the 5th AML Directive, which are intended to achieve the above objective, include "increasing the transparency of information on beneficial owners of corporate entities and legal arrangements."** The changes introduced in Polish law regarding the Central Register of Beneficial Owners (hereinafter referred to as CRBR) will enter into force on October 30, 2021, so we will take a look at the scope of the planned changes and explain what CRBR is.

What is CRBR?

The Central Register of Beneficial Owners was launched on October 13, 2019. The competent authority for its matters is the Minister of Public Finance. Data collected and processed in this system concerns beneficial owners, i.e., individuals who exercise direct or indirect control over a given entity.

As the Ministry of Finance points out, "One of the main tasks of the Central Register of Beneficial Owners (CRBR) is to counteract money laundering and terrorism financing. Having accurate and up-to-date data on beneficial owners is crucial to combating these phenomena, as it prevents criminals from concealing their identities within complex corporate structures. The public nature of the register, which allows everyone free access to information on beneficial owners, also ensures greater control of information by civil society and contributes to increased trust in the financial market and economic participants."***

Which entities must submit a report?

Currently, the obligation to report the beneficial owner applies to the following companies:
• general partnerships
limited
partnerships • limited joint-stock
• limited liability
companies • simple joint-stock companies (from March 1, 2021)
• joint-stock companies, with the exception of public companies within the meaning of the Act of July 29, 2005 on public offering and conditions for introducing financial instruments to organized trading and on public companies (Journal of Laws of 2019, item 623).

One of the major upcoming changes concerns the expansion of the above-mentioned catalogue. Pursuant to Article 16 of the Amending Act, within three months of its entry into force (i.e., by January 30, 2022), the following entities will be required to report information about their beneficial owners to the Central Register of Beneficial Owners (CRBO):

• partnerships
• European economic interest groupings
• European companies
• cooperatives
• European cooperatives
• associations subject to entry in the National Court Register
• foundations
• trusts whose trustees or persons holding equivalent positions:

- have their place of residence or registered office in the territory of the Republic of Poland or
- establish business relations or acquire real estate in the territory of the Republic of Poland on behalf of or for the benefit of a trust.

Who submits the report and when?

The April amendment clarified who submits the CRBR report. This must be a person authorized to represent the entities indicated above (and in the case of trusts, a trustee or equivalent). Therefore, it is not possible to delegate this task to another person. When submitting a report, the authorized person must provide their name, citizenship, country of residence, PESEL number (or date of birth if the person does not have a PESEL number), and the position entitling them to submit the report.

The amending act clarified the deadlines. A deadline of 7 days from the date of entry of an entity into the National Court Register for reporting the beneficial owner has been retained. However, when it comes to data updates, for constitutive entries, this will be 7 days from the date of the change in the National Court Register, and for declaratory entries (i.e., those that merely confirm changes and do not produce legal effects, such as a change in the composition of the management board), 7 days from the actual change, not from its disclosure in the register.

The deadlines for trusts should be calculated slightly differently. Detailed rules regarding them can be found in Article 60, paragraph 1, point 2; Article 60, paragraph 1a, point 2, and Article 60, paragraph 1b of the amended AML Act.

What data should be reported to CRBR?

The registration application includes (except for trust applications) the identification data of the entity:

• name (company)
• organizational form
• registered office
• number in the National Court Register
• Tax Identification Number (NIP), if assigned

identification data of the beneficial owner and the member of the body or partner authorized to represent the company:

• name and surname
• citizenship (from October 30, all citizenships held)
• country of residence
• PESEL number or date of birth – in the case of persons who do not have a PESEL number
• information on the amount and nature of the share or rights to which the beneficial owner is entitled.

What are the penalties?

Failure by obligated entities to meet their statutory obligations may result in severe penalties. Failure to report the beneficial owner or providing false information may result in a fine of up to PLN 1,000,000.

The beneficial owner may also be subject to a fine if they fail to provide the required information to the person authorized to file the report, resulting in the report not being filed or inaccurate information being provided. In such cases, the fine can reach PLN 50,000.

Other changes

The amending act introduces several other significant changes. Among other things, it expands the list of data subject to reporting, imposes on institutions obligated under the AML Act the obligation to independently verify beneficial owners and report any discrepancies noted to the Minister of Finance, and introduces the option of initiating an investigation, which may culminate, for example, in a decision to correct data in the Central Register of Beneficial Owners (CRBR), replacing the reporting requirement by the entities obligated to do so.

There is little time left before the changes come into effect, and given the complex ownership relationships and uncertainties surrounding the definition of the beneficial owner, it is worth preparing in advance to make correct entries in the CRBR. This is especially true given that irregularities are punishable by severe penalties.

* Justification of the draft act amending the act on counteracting money laundering and terrorism financing and certain other acts, form No. 909 of 19 January 2021.
** Ibidem
*** https://www.gov.pl/web/finanse/centralny-rejestr-beneficjentow-rzeczywistych

This alert is for informational purposes only and does not constitute legal advice.

|

|