Despite that the decision to impose an administrative penalty on one of the largest real estate agents in Poland in relation to the breach of the provisions of the Polish Act on Counteracting Money Laundering and Terrorist Financing in the amount of PLN 500,000 was widely discussed, again, this time on a large financial broker also providing services in the field of real estate transactions, an administrative penalty of the same amount was imposed. However, many real estate agencies still have not implemented the AML procedure. We invite you to read the article in which you will learn what the AML procedure is, whether the AML regulation applies to all real estate agents and what consequences can be expected in the event of non-implementation.
AML is a commonly used abbreviation to describe the so-called anti-money laundering. In Poland, the basic legal act regulating this matter is the Act of 1 March 2018 on Counteracting Money Laundering and Terrorist Financing (the so-called AML Act), significantly amended in 2021, which is the implementation of EU regulations. The AML Act sets out the rules and the procedure for counteracting money laundering and terrorist financing as well as the conditions for the pursuit of economic activity by certain obliged institutions.
Real estate agent as an obliged institution
Pursuant to the Polish AML Act, institutions that are required to implement internal AML procedures are real estate agents within the meaning of the Polish Act of 21 August 1997 on Real Estate Trading and Management, excluding real estate agency activities intended to enter into a lease contract for real estate or a part thereof, in which the monthly rent was determined in the amount lower than the equivalent of EUR 10,000. Therefore, obligated institutions are all real estate agents providing services in the field of purchase / sale of real estate and lease of real estate (from the amount specified in the AML Act). The size of the real estate agency, the legal form of the business (sole proprietorship or company), the number of employees or the number of transactions is irrelevant.
The obligations of real estate agents under the AML Act
The obligations of real estate agents resulting from the AML Act include in particular:
- preparation and implementation of the internal AML procedure,
- preparation and carrying out of risk assessment,
- appointment of persons responsible for activities in the AML area,
- implementation of financial security measures related to a business relationship or an occasional transaction, including:
- identifying the customer and verifying the customer’s identity,
- identifying the beneficial owner and taking reasonable measures to verify that person’s identity and, in the cases specified in the AML Act, determine the ownership and control structure,
- assessing and, as appropriate, obtaining information on the purpose and intended nature of the business relationship,
- conducting ongoing monitoring of the business relationships of the customer in the scope specified in the AML Act,
- documenting the activities carried out and archiving the AML documentation,
- periodic updating of documentation,
- participation in / providing employees with AML trainings,
- cooperation with institutions established to act in the field of AML.
Processing of personal data in order to fulfill the AML obligations
Real estate agents, like other obligated institutions, under the AML regulations have a basis to process their clients’ personal data to the extent required by the legislator, including the preparation of copies of identity cards of the client and the person authorized to act on behalf of the client. Nevertheless, the internal AML procedures in the real estate agency must be implemented taking into account the obligations arising from the provisions of the GDPR, in particular the principle of minimizing the processing of personal data. Real estate agents are obliged to their clients, in particular, to fulfill the information obligation, i.e., to inform clients about the obligations of the obliged institution resulting from the AML Act related to the processing of such data and arising from the statute.
List of the breaches
Administrative penalties may be imposed for failure to perform or incorrect performance of obligations under the AML Act. The AML Act distinguishes three categories of breaches:
- failure to fulfill obligations within the scope of the provisions of the AML Act itself (Article 147 of the AML Act),
- failure to comply with the obligations arising from EU regulations (Article 148 AML),
- failure to comply with obligations with regard to the application of specific restrictive measures (Art. 149 AML).
From the point of view of the activities of real estate agents, the most important one is the first category, including such breaches as failure to comply with the obligation to prepare a risk assessment and update it, apply financial security measures, or introduce an internal AML procedure.
The AML Act provides for the following catalog of administrative penalties:
- the publication of information on the obliged institution and the scope of the breach of the provisions of the AML Act committed by that institution in Polish Biuletyn Informacji Publicznej [the Public Information Bulletin] on the website of the office providing services to the minister responsible for public finance,
- an order that the obliged institution stop undertaking certain activities,
- the withdrawal of a licence or permit or deletion from a regulated activity register,
- a prohibition on performing obligations in a managerial position for the person responsible for the breach of the provisions of the Act committed by the obliged institution, for a period not longer than 1 year,
- a financial penalty.
In the case of real estate agents, financial penalty shall be imposed up to twice the amount of the benefit achieved or the loss avoided by the obliged institution as a result of the breach or-where it is impossible to determine the amount of that benefit or loss-up to the equivalent of EUR 1,000,000.
In addition to administrative penalties for breaches of the obligations under the AML Act, criminal sanctions may be imposed resulting both from the AML Act itself and from the Polish Criminal Code. For example, the criminal provisions of the AML Act, depending on the severity of the act, provide for the possibility of imposing a fine or imprisonment for a period from 3 months to 5 years.
Who is responsible for non-performance or incorrect performance of obligations under the AML Act
Responsibility for non-performance or incorrect performance of obligations under the AML Act rests primarily with the obligated institutions. However, administrative penalties as well as criminal sanctions may be imposed on natural persons, i.e., members of the management board of the obligated institution (the company), indicated as persons responsible for the performance of AML obligations, as well as senior management or employees holding managerial positions responsible for ensuring compliance with the activities of the obligated institution and its employees with AML regulations.
If you need legal advice related to the implementation of the AML or GDPR regulations in your organization, please contact the Law Firm via the Contact Form available on the website joannakoziollek.com or by e-mail to the following e-mail address: firstname.lastname@example.org