New obligations for ultimate beneficiaries and entities recorded in the Central Register of Ultimate Beneficiaries

The Council of Ministers has prepared draft legislation to amend the Counteracting Money Laundering and Financing of Terrorism Act (hereinafter referred to as the “Draft”) and sent it to the Polish Parliament (Sejm) for consideration. Although the Draft focuses mainly on financial institutions and public trust, some of its amendments apply to all ultimate beneficial owners (“UBOs”) of Polish companies, and to such companies themselves, so it is important for the entire market.

The duties are imposed on ultimate beneficiaries

The Draft (for the first time) imposes obligations directly on the ultimate beneficiaries.

The current law does not impose a formal, explicit obligation on ultimate beneficiaries to cooperate with the company’s management board when it prepares information required to register the UBO in the Central Register of Ultimate Beneficiaries (“CRUB”). It is the management board’s responsibility to identify beneficiaries and to make the necessary filling (and to make related declarations under the pain of criminal liability in case of  for incorrect filling). In principle, passivity on the part of the beneficiary is not punished.

The Draft proposes a diametric change. Ultimate beneficiaries would, for the first time, be the addressee of a statutory obligation to actively participate in preparing the notification and to provide the company with all necessary information and documents, within stated deadlines.

Failure to comply with this obligation would be subject to a maximum fine of PLN 50,000, imposed directly on the beneficiary. The fine may be imposed if, due to the UBO’s failure to cooperate, the notification (or any update thereof) is delayed or factually incorrect.

Corporate responsibility – not only for delay, but also for providing false data

The Draft expands corporate liability.

The current law imposes a maximum fine of PLN 1,000,000 on companies which fail to comply with the obligation to report or update data within the statutory deadline. It is debatable whether the current law also enables a fine to be imposed if the company provides factually incorrect data.

The Draft clarifies this by clearly stating that a fine may be imposed if a company provides factually incorrect data. Liability would be imposed not only on the company’s representative who filed the false declaration but also on the company itself.

Discrepancies between the data recorded in the Central Register and the data reported, for example, to the Bank – new rules

The project introduces a mechanism for identifying and reporting discrepancies in reports on UBOs for various purposes, in various institutions.

The Draft includes a completely new solution – a mechanism to verify whether the information contained in the CRUB is correct. Such an obligation would be imposed on so-called obligated institutions, including banks, notaries, legal advisers, lawyers, entities which offer bookkeeping services etc. Such institutions would be required to record discrepancies between their own findings regarding beneficial owners and data available in the CRUB. If a discrepancy is identified, the institution would be obliged to notify the Minister of Public Finances. If proceedings before the Minister confirm the discrepancy, the authority can impose a maximum fine of PLN 1,000,000 on the entity which submitted the incorrect data. Additionally, the natural person who filed the incorrect notification will be liable for any harm caused by such incorrect filling.

Thus, an obligated institution cannot rely solely on an extract from the CRUB without carrying out its own identification and verification process of the UBO. This means that, instead of getting simpler, AML procedures are likely to become lengthier.

For companies, this will require them to efficiently unify any UBO declarations they have submitted in recent years to banks, leasing companies, etc. to ensure compatibility with the contents of the CRUB.

Which entities will also be obliged to be entered in the CRUB?

The Draft also expands the list of entities that must be registered in the Central Register of Ultimate Beneficiaries.

If the amendment is adopted, the following entities will need to be registered, among others:

• trusts whose trustees (or persons holding equivalent positions) (i) have their place of residence (seat) in the territory of Poland or (ii) establish business relations / acquire real estate in Poland (in the name or, on behalf of, a particular trust);
• partner companies;
• cooperatives;
• associations which must be registered in the National Court Register;
• foundations.

These entities will need to make the necessary notification within 3 months from the date on which given provisions enter into force.

How can we help you?

In practice, the new law will apply to most participants in economic transactions and create a universal obligation to report information about UBOs. We can help you, among other ways, to:

• identify beneficiaries;
• standardize your UBO notifications to various institutions and jurisdictions;
• develop policies to identify UBOs of your companies;
• help to identify ultimate beneficiaries for new entities that are subject to the reporting obligation.