The Act Amending the Act on Counteracting Money Laundering and Terrorist Financing and Certain Other Acts (Journal of Laws 2021, item 815; hereinafter referred to as the Amendment) adopted on March 30, 2021 introduces significant changes for accounting offices. From July 31, 2021, the requirements of the Act of March 1, 2018, on Counteracting Money Laundering and Terrorist Financing (Journal of Laws 2018, item 723, as amended; hereinafter referred to as the AML Act) will apply to entrepreneurs whose business activities consist of providing services in the preparation of tax returns, maintaining tax books, and providing advice, opinions, or explanations regarding tax or customs law, and who are not other obligated institutions. Furthermore, the amendment also introduces numerous new obligations to combat money laundering and terrorism financing, and modifies existing ones. Accounting offices responsible for maintaining tax records, which were previously not classified as obligated institutions, should be particularly interested in these changes. What does this amendment mean for them?

Accounting office as an obligated institution

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 many entities, classified as "obligated institutions," as defined in Article 2, Section 1 of the Act.

Under the AML Act, obligated institutions are entities on which the Act imposes a number of obligations related to counteracting money laundering and terrorist financing. Article 2, Section 1 of the AML Act contains a closed list of obligated institutions, which include domestic banks, branches of foreign banks, branches of credit institutions, cooperative savings and credit unions, insurance companies, tax advisors, and entities providing bookkeeping services.

As of July 31, 2021, the list of obligated institutions will be expanded to include several new entities, including entrepreneurs whose primary business activity is providing services involving the preparation of tax returns, maintaining tax records, and providing advice, opinions, or explanations regarding tax or customs law. This means that the requirements of the act will apply to all accounting firms, regardless of the type and number of clients they serve.

What requirements must accounting offices meet to avoid facing severe penalties under the AML Act?

Pursuant to Article 50 of the AML Act, an accounting office, as an obligated institution, is obliged to introduce an internal procedure for counteracting money laundering and terrorism financing.

An internal procedure should define the rules of conduct applied by a given accounting firm to mitigate the risk of money laundering and terrorist financing. The legislator included detailed requirements for this procedure in Article 50, Section 2 of the AML Act, which include, in particular, the principles for recognizing and assessing the risk of money laundering and terrorist financing, the principles for fulfilling obligations related to providing information about transactions and notifications to the General Inspector, and even the principles for disseminating knowledge of AML and CFT regulations among the employees of the obligated institution. The amendment expanded the scope of the internal procedure to include the obligation to include rules for recording discrepancies between information collected in the Central Register of Beneficial Owners and information on the client's beneficial owners established in connection with the application of the Act, as well as documenting difficulties identified in connection with the verification of the beneficial owner's identity and actions taken in connection with the identification of a natural person holding a senior management position as the beneficial owner. Furthermore, as stated in Article Under Article 27 of the AML Act, accounting firms are required to identify and assess the risks associated with money laundering and terrorist financing. Simply put, this analysis involves determining the entrepreneur's vulnerability to the risk of money laundering, whether through their participation or through their intermediation. For small accounting firms, this procedure will be straightforward. Importantly, pursuant to Article 27, Section 3 of the AML Act, the risk assessment should be prepared in paper or electronic form and updated at least every two years.

Once the risks associated with money laundering and terrorist financing have been analyzed and internal procedures have been developed, the accounting firm should next appoint a person responsible for the proper implementation and execution of AML obligations. In small accounting firms, appointing a single person may be sufficient.

Each obligated institution will also be required to have and implement a customer identification and verification procedure. This means that they will be required to determine the data specified in Article 36, Section 1 of the AML Act. For natural persons, this will include their name, surname, citizenship, country of birth, and PESEL number. For legal entities, this will include detailed information about the person authorized to represent the legal entity, as well as the legal entity's name, organizational form, registered office address or place of business, and Tax Identification Number (NIP). Verifying the customer will result in determining their risk profile for money laundering purposes.

Each obligated institution is also required to identify the beneficial owner and verify whether the client is a politically exposed person (PEP), a family member, or a person known to be a close associate of the PEP. Determining PEP status is required for each client and beneficial owner. Identifying a PEP requires applying specific financial security measures to the client, as provided for in the AML Act.

It's worth remembering that the AML Act requires obligated institutions to conduct training aimed at raising the level of knowledge and awareness of individuals performing duties related to counteracting money laundering and terrorist financing. However, this training should be conducted regularly, not on a one-off basis. Importantly, Article 52, Section 3 of the Act specifies that in the case of sole proprietorship, the entrepreneur will be required to utilize an external training program.

Sanctions for failure to comply with obligations arising from the AML Act

Failure by an obligated institution to fulfill these obligations may result in both administrative and criminal sanctions being imposed.
Pursuant to Article 150(1) of the AML Act, the list of administrative penalties includes:

• publication of information about the obligated institution and the scope of the infringement of the provisions of the Act by that institution in the Public Information Bulletin on the website of the office serving the minister responsible for public finances;
• an order to cease certain activities by the obligated institution;
• withdrawal of a license or permit or deletion from the register of regulated activities;
• a ban on performing duties in a managerial position by a person responsible for the infringement of the provisions of the Act by the obligated institution, for a period not longer than one year;
• a financial penalty.

Importantly, a fine may be imposed up to twice the amount of the benefit gained or loss avoided by the obligated institution as a result of the infringement or – if it is impossible to determine the amount of such benefit or loss – up to the equivalent of EUR 1,000,000.

In terms of criminal sanctions, it is worth noting Article 156, Section 1 of the AML Act. According to this provision, failure by an obligated institution to notify the General Inspector of circumstances that may indicate a suspicion of money laundering or terrorist financing, or failure to notify the General Inspector of a reasonable suspicion that a specific transaction or assets covered by that transaction may be related to money laundering or terrorist financing, as well as failure to provide the General Inspector with false data regarding transactions, accounts, or individuals, is punishable by imprisonment from 3 months to 5 years. If the perpetrator of the above-mentioned act acts unintentionally, they are subject to a fine.

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

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