Customer verification obligation
Every obligated institution is obliged to apply financial security measures towards its clients.
Before establishing cooperation with a client, an obligated institution should conduct a KYC (Know Your Costumer) procedure, which involves identifying the risk of money laundering and terrorism financing in connection with a planned business relationship or occasional transaction. The procedure results in a risk assessment and the potential implementation of financial security measures.
The procedure should be duly documented. The following should be taken into account:
a) the type of client;
b) the geographical area;
c) the purpose of the account;
d) the type of products, services, and their distribution methods;
e) the level of assets deposited by the client or the value of transactions conducted;
f) the purpose, regularity, or duration of the business relationship.
As part of the procedure, the following should be verified:
a) sanction lists;
b) PFSA warning lists;
c) who is the beneficial owner of the company in the Central Register of Beneficial Owners;
d) companies related to the beneficial owner;
e) whether the client is on the VAT white list;
f) whether the company has settlement account numbers or personal accounts with SKOK;
g) persons who are members of the management board and partners.
In terms of verification of persons associated with the client, it is necessary to verify:
a) whether the person holds a politically exposed position (PEP);
b) whether the person is a family member of a person holding a politically exposed position (RCA);
c) whether the person is on the KNF warning list;
d) whether other companies are associated with the person;
e) whether the person is a citizen of a high-risk country.
We conduct such verification before establishing a business relationship or conducting an occasional transaction. Documents collected during the verification process must be retained, as, upon request by the authorities, obligated institutions must demonstrate that they have implemented appropriate financial security measures, taking into account the level of money laundering and terrorist financing risk identified in a given business relationship or occasional transaction.
Financial due diligence measures should be applied to a extent and with an intensity that takes into account the identified risk of money laundering and terrorist financing.
Financial due diligence measures also include assessing the business relationship and, where appropriate, obtaining information about its purpose and intended nature and ongoing monitoring of the client's business relationship.
Financial security measures should be applied when:
1) we establish a business relationship with a client;
2) we conduct an occasional transaction
the equivalent of EUR 15,000 or more, regardless of whether the transaction is carried out as a single operation or several operations that appear to be linked, or
a) which constitutes a transfer of funds exceeding the equivalent of EUR 1,000;
b) using virtual currency equivalent to EUR 1,000 or more;
c) conducting an occasional cash transaction equivalent to EUR 10,000 or more, regardless of whether the transaction is carried out as a single operation or several operations that appear to be linked;
d) placing bets and receiving winnings equivalent to EUR 2,000 or more, regardless of whether the transaction is carried out as a single operation or several operations that appear to be linked;
e) suspicions of money laundering or terrorist financing;
f) doubts as to the veracity or completeness of customer identification data obtained to date.
If it is not possible to apply one of the security measures, we do not establish a business relationship, we do not conduct an occasional transaction, we do not conduct a transaction via a bank account, or we terminate the business relationship with the customer.
Simplified financial security measures
If it turns out that the verification and risk assessment carried out confirm a lower risk of money laundering and terrorist financing, obligated institutions may apply so-called simplified financial security measures.
A lower risk of money laundering and terrorism financing may be demonstrated primarily by the fact that the client is:
- a public finance sector entity, a state-owned enterprise or a company with a majority shareholding of the State Treasury, local government units or their associations,
- a company whose securities are admitted to trading on a regulated market, resident of a Member State,
- a resident of a third country defined by reliable sources as a country with a low level of corruption or other criminal activity, a resident of a third country in which, according to data from reliable sources, anti-money laundering and anti-terrorist financing regulations are in force that meet the requirements of European Union anti-money laundering and anti-terrorist financing regulations.
In addition, we will apply simplified financial security measures when concluding an insurance contract where the annual premium does not exceed the equivalent of EUR 1,500 or the single premium does not exceed EUR 3,500, the transaction concerns joining and participating in an employee pension plan, participating in an employee capital plan, concluding an agreement and accumulating savings in an individual pension account or individual retirement security account, and when we offer products or services to ensure appropriately defined and limited access to the financial system for customers with limited access to the products or services offered under that system, and when we offer products or services related to the customer in which the risk of money laundering and terrorist financing is mitigated by other factors, including participation units in open-end investment funds or specialized open-end investment funds or certain types of electronic money.
Simplified customer due diligence measures will also apply when business relationships or occasional transactions are linked to a Member State, a third country identified by reliable sources as having a low level of corruption or other criminal activity, or a third country where, according to data from reliable sources, anti-money laundering and anti-terrorist financing regulations are in force that meet the requirements of European Union anti-money laundering and anti-terrorist financing regulations.
The use of simplified financial security measures is excluded if there is a suspicion of money laundering or terrorist financing, or if there are doubts as to the veracity or completeness of the customer identification data obtained so far.
The basic element determining whether it will be possible to apply simplified security measures is the correct conduct of the contractor verification procedure, therefore we encourage you to contact our lawyers who will help you conduct the KYC procedure and decide whether you can apply simplified security measures or whether it is necessary to apply measures on a broader scale.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of May 24, 2023
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