Article 8 of the AML Act* requires obligated institutions to appoint an employee holding a managerial position whose task will be to ensure compliance of the activities of a given obligated institution and its employees and other persons performing activities on behalf of that obligated institution with the provisions of the Act.

Interestingly, the Fourth AML Directive, which was implemented by the AML Act, did not require member states to establish such a requirement in an absolute manner. It merely stipulated that such a person should be designated when "appropriate given the size and nature of the activities" of the obligated institution. However, Polish lawmakers went a step further, and as a result of the clear wording of the aforementioned Article 8, the designation of such a person is absolutely required in every obligated institution.

The list of obligated institutions has recently been revised (July 31, 2021) and is now very broad. They are listed exhaustively in Article 2, Section 1 of the AML Act. In addition to large entities such as banks, investment funds, and companies operating a regulated market, obligated institutions include entities providing accounting services, and in some situations even foundations and associations.

What does an AML Officer do?

The scope of activities of the AML Officer can be divided into three groups.

The first is to ensure compliance of the activities of the obligated institution and its employees, as well as other persons performing activities on behalf of that obligated institution, with anti-money laundering and counter-terrorism financing regulations (performing security guarantor duties). It is worth noting that these activities should be performed both in response to current issues and guidelines within the obligated institution, but also, crucially, preventively. Situations that may require such actions include changes to the organizational structure, scope of responsibilities, services provided, the introduction of new products, the hiring of new staff, etc.

The second group concerns the submission on behalf of the obligated institution of notifications referred to in Article 74 paragraph 1, Article 86 paragraph 1, Article 89 paragraph 1 and Article 90 of the AML Act;

The third is the implementation of other tasks and ensuring compliance with current regulations related to counteracting money laundering and terrorism financing, e.g., supervising and verifying risk-based ML/FT assessments, preparing internal regulations referred to in Article 50 of the AML Act, organizing external training for designated employees, self-education, participating in courses, training sessions, symposia, meetings, etc. related to AML/CFT topics, and cooperating with the prosecutor's office and other services (Police, Internal Security Agency, Central Anti-Corruption Bureau, National Revenue Service).**

Who can become one?

An AML officer should be qualified and competent in ensuring compliance with the AML Act, but knowledge of financial crime methodologies and risk management methods is also recommended. It is crucial to match the individual to the specific organization, including its scope of operations, specific nature, and size. Furthermore, elements unrelated to the knowledge and qualifications of a potential AML officer are also important, including soft skills.

When creating such a position, an obligated institution should assess whether a given individual can perform duties related to counteracting money laundering and terrorist financing, in addition to their core responsibilities, by assessing their current workload. In larger entities, it may be necessary to create a separate AML Officer position, whose responsibilities will be solely related to AML, or even to create an entire specialized team. It is noted that the AML Act does not require this to be a single-person position. In large obligated institutions, this could be problematic, and sometimes even impossible. In such entities, a division is often found, for example, between an AML Officer responsible for compliance and internal controls, and a so-called MLRO (Money Laundering Reporting Officer), who is responsible for analyzing alarming situations, signals and information received within the organization, and then assessing which transactions should be reported to the Inspector General for Financial Information.

To effectively perform their duties, an AML Officer must be granted appropriate authorizations. Such an individual should have the greatest possible executive power, which, of course, cannot conflict with the provisions of the Commercial Companies Code (e.g., in the case of a multi-person management board). At a minimum, they should have a direct reporting channel to the supervisory body (e.g., the supervisory board) and participate in all work related to the introduction of new or significant modifications to existing products or services, with the right of veto.***

AML Officer Protection

The March amendment to the AML Act introduced legal protection in Article 53a, among others, for AML Officers. This provision will enter into force on October 31, 2021, and obliges obligated institutions to provide such individuals with protection against repressive actions, actions that worsen their legal or factual situation, or actions that involve threats. Employees and other persons performing activities on behalf of the obligated institution who are exposed to the aforementioned repression are entitled to report such actions to the General Inspectorate of Financial Information (GIFI). This protection applies to counteracting possible repression by external entities (e.g., clients), as well as by individuals within the obligated institution.

Responsibility

Under the AML Act, not only obligated institutions are subject to liability. If a competent authority finds that obligated institutions have violated certain obligations, a penalty may be imposed on specific individuals (e.g., a ban on performing managerial duties by the person responsible for violating the Act's provisions for a period of up to one year, or even a fine of up to PLN 1 million). This group includes members of the management board of the obligated institution responsible for fulfilling AML obligations, senior management responsible for fulfilling the obligations specified in the Act, as well as employees in managerial positions responsible for ensuring compliance of the obligated institution and its employees with AML regulations, i.e., the AML Officers described in this article. With respect to these individuals, the authority also applies the penalty guidelines listed in Article 150, paragraphs 4 and 5, including the severity and duration of the violation and financial capacity.

* Act of 1 March 2018 on Counteracting Money Laundering and Terrorist Financing (consolidated text: Journal of Laws of 2021, item 1132, as amended).
** MA Kędzierski, Obligations and liability of an AML officer (AMLO) in an obligated institution (part 1), Prosecutor's Office and Law 5, 2021
*** J. Stolarczyk [in:] Counteracting Money Laundering and Terrorist Financing. Commentary, ed. W. Kapica, Warsaw 2020, art. 8.

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

|

|