Fight against money-laundering brings amendments to the laws
The Money Laundering and Terrorist Financing Prevention Act draft transposes requirements arising from the EU directives and takes into account the problems highlighted during the last Moneyval assessment as well as issues raised by market participants. For example, the circle of persons who must consider the requirements of the law in their activities is amended and the cooperation opportunities of different parties in applying the due diligence measures are improved.
The Chamber applauds the efforts of the Ministry of Finance upon preparing the draft, even more so that there are several draft amendment acts of the same act being worked on simultaneously. However, we highlighted several problems and made proposals for decreasing the administrative burden on entrepreneurs.
Improving cooperation opportunities between the obligated persons
The draft allows the obligated persons (banks, notaries, real estate agencies, auditors etc.) to exchange information concerning the actual beneficiaries of a person or client participating in a transaction and existence of public background – i.e. information that in its nature is public and for which a client cannot expect confidentiality. The amendment gives the obligated persons the opportunity to exchange information, which one party needs and the other has acquired in order to perform an obligation for applying due diligence measures arising from the law.
In the Chamber’s opinion, the added provision is of high importance from the practical point of view of prevention of money laundering, because applying the due diligence measures by the obligated persons is the first line of defense in the fight against money laundering. However, the situation where the clients have to submit similar data to the obligated persons repeatedly, which means additional administrative burden and expenses, needs solving.
Members of the Chamber also set out that the amount of information set out in the draft is clearly insufficient to make the process more efficient. Furthermore, the proposed solution is not functioning in all situations and it is not clear how the added provision could be implemented in practice.
Therefore, we proposed to update the amount of information that the obligated persons may exchange between themselves.
Improving the quality of data on actual beneficiaries published in the commercial register
The draft foresees that an obligated person who, during the course of applying the due diligence measures, learns of the data of a client’s actual beneficiary, which differ from the data disclosed by the client in the Commercial Register, will add a so-called warning mark to the data via the administration interface. The person who submitted data is informed automatically of this warning and they can remove the warning through one of the two manners: by updating the data or confirming correctness of the data. The removed warning will remain visible in the data history of the actual beneficiaries. To manage risks, a restriction has been foreseen that after the data on the actual beneficiaries have been amended or their correctness confirmed by an authorized person, a new warning mark cannot be added within 30 days. Furthermore, a misdemeanor punishment is foreseen for intentionally adding an incorrect warning mark.
In the opinion of the members of the Chamber, the regulation of warning marks does not hinder a person from concealing the actual beneficiary more than before, if the person is determined to do so. They may consistently delete the warning marks, followed by a 30-day control-free period each time, during which the correctness of the data cannot be placed in doubt. And what would be the purpose of the provision in such case, if the warning mark can be deleted without having to amend the data and inform the obligated person?
As a result, the Chamber proposed to consider applying a one-off 30-day ‘immunity period’ or, as a more preferred option, an inspection carried out by the registrar in case of second warning. Considering that the register is national, checking of the data contained therein should be within the area of competence of the state, while giving the companies the obligation to submit correct data.