Date 13 October 2019, by law of 1 March 2018 on the prevention of money laundering and financing of terrorism, the provisions implementing the Polish legal system of the Central Register of Real Beneficiaries (CRBR) and the obligation to report and update information on companies and their beneficial owners in the CRBR entered into force.
The purpose of the above is in theory to increase the efficiency of the anti-money laundering system, and to adapt Polish regulations in this respect to existing international standards. Let's look at the operation of the register.
Characteristics of the real beneficiary
When describing this issue at first it is worth explaining who the real beneficiary is. Under Article 1(2)(1) of the Anti-Money Laundering and Counter-Terrorist Financing Act, a beneficial owner means a natural person or natural persons exercising direct or indirect control over the client through powers which arise from legal or factual circumstances that enable the client to exercise decisive influence on the activities or activities undertaken by the client, or a natural person or natural persons on whose behalf business relations are established or occasional transactions are carried out, including:
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in the case of a customer who is a legal person other than a company whose securities are admitted to trading on a regulated market subject to disclosure requirements under European Union law or equivalent State law third:
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- a natural person who is a shareholder or shareholder of a client who is entitled to ownership more than 25% the total number of shares or shares of that legal person,
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- a natural person with more than 25% the total number of votes in the client body, including as a pledge or user, or on the basis of agreements with other voting rights,
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a natural person exercising control over a legal person or legal person who together holds ownership more than 25% the total number of shares or shares of the client, or together having more than 25% the total number of votes in the customer's body, including as a pledge or user, or on the basis of agreements with other voting rights,
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a natural person exercising control over the customer by having the powers referred to in Article 3(1)(37) Act of 29 September 1994 on accounting (Journal of Laws of 2019, item 351), or
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a natural person holding a senior management position in the event of a documented inability to identify or doubt the identity of the natural persons referred to in the indent first, second, third and fourth and where money laundering or terrorist financing is not suspected,
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in the case of a trust client:
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- the founder,
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- the trustee,
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- the supervisor, if established,
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- the beneficiary,
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- another person controlling the trust,
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in the case of a customer who is a natural person pursuing an economic activity for whom no conditions or circumstances have been established that may indicate that another natural person or natural person is exercising control of him, such a customer shall be presumed to be a real beneficiary at the same time.
The real beneficiary is therefore always a natural person. In the case of capital companies, it is most often a shareholder of a capital company who holds more than 25% shares or shares of such a company or a partner which holds more than 25% the total number of votes in the company, also on the basis of agreements with other voting rights or as a pledge or user of shares.
Who is to report information on actual beneficiaries
Based on Article 58 The anti-money laundering and terrorist financing laws for reporting and updating the beneficiaries are: public companies, limited companies, limited limited-stock companies, limited-liability companies and public limited-liability companies.
Since the Law exhaustively enumerates the entities obliged to make notifications, it should be considered that entities not subject to such an obligation are not subject to it. Thus, it is not mandatory, for example, for natural persons active in business, foreign entrepreneurs, branches of foreign companies, foundations or associations.
Companies already in existence are obliged to comply with the notification obligations described above by the deadline until 13 April 2020 In the case of newly created companies, information on the real beneficiaries is to be reported within the time limit 7 days from the date of entry of the company in the register of entrepreneurs of the National Court Register. 7-the day-end period shall also apply in the event of a change in the data transmitted to the register.
Scope of information to be reported
The scope of the information to be reported to the CRBR is regulated Article 59 Act. This information shall include:
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identification of the companies listed in Article 58:
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- name (company),
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- organisational form,
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- the premises,
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- number in the National Court Register,
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- NIP,
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identification of the beneficial owner and of the member of the body or of the member entitled to represent the companies listed in Article 58:
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- name,
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- nationality,
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- country of residence,
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- PESEL number or date of birth - for persons without PESEL number,
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- information on the size and nature of the participation or powers of the beneficial owner.
Theoretically, having real beneficiary data should be of great importance to combat money laundering phenomena as it makes it difficult to hide someone's identity in a complex corporate structure. However, the solutions introduced are flawed
Formalities for registration
An application to the CRBR shall be made by the person empowered to represent the company. It is made free of charge via the website. The notification shall bear a qualified electronic signature or a certified ePUAP trusted profile. The CRBR is therefore a public register, so that information on the beneficial owners is made available free of charge upon request. The provision of information from the CRBR shall be by electronic means .
Under the rule Article 61 The Act, the CRBR notification shall contain a statement by the person making the notification of the veracity of the information reported to the Register. Declaration referred to in section 4, is placed under penalty for making a false statement.
However, according to Article 233 The Criminal Code ‘Who, by giving a statement intended to serve as evidence in judicial proceedings or in any other proceedings conducted under the law, declares false or conceals the truth, shall be subject to imprisonment from 6 months to years 8”.
Penalties for failure to comply with the notification
Notwithstanding the criminal liability of the person making the false statement, the Act also creates the liability of companies which have not fulfilled the obligation to notify the CRBR within the abovementioned deadlines. These companies are subject to a penalty of up to 1,000,000 PLN.
Theoretically, having real beneficiary data should be of great importance to combat money laundering phenomena as it makes it difficult to hide someone's identity in a complex corporate structure.
The public nature of the register allowing everyone free access to beneficial ownership information also ensures greater public control of information. However, the solutions introduced are flawed.
First of all, there will certainly be difficulties in determining who the real beneficiary is in entities with a distributed, expanded ownership structure. Furthermore, for not complying with the notification obligation, the existing rules provide for a fine only against the company, which also gives rise to fraud.
Therefore, the introduction of the new rules will undoubtedly create many obstacles to the daily functioning of ordinary businesses, but does not guarantee the achievement of the objective of eliminating money laundering.
Written by Michał Wasilenko
Lawyer, Senior Associate in the Legal Department, member of the Bar Association in Lublin, graduate of the Faculty of Law and Administration at Maria Curie-Skłodowska University in Lublin. He specializes in commercial and civil law law.