In February this year, a draft law of the Money Laundering and Terrorist Financing Prevention Act (hereinafter referred to as the Law) was prepared, which will implement amendments to the Directive of the European Union on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (Directive (EU) 2015/849 of the European Parliament and of the Council of May 20, 2015).
According to the Ministry of Finance, these amendments provide for the creation of a separate register of beneficiaries under the Commercial Register. The Board of a commercial company will be responsible for the accuracy of data entry.
The new law is mainly needed due to the abovementioned fourth Directive of the European Union (hereinafter referred to as the EU) on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing and the proposal for amending it.
In addition, amendments are made in accordance with the Regulation of the European Parliament and of the Council No. (EU) 2015/847 on information accompanying transfers of funds.
What will change?
The innovations are primarily aimed at preliminary risk assessment (preventive measures of diligence), beneficiary identification (capital control), international cooperation between supervisory authorities and the Financial Intelligence Unit (information exchange).
- According to the above Directive, all legal entities are obliged to know their true beneficiaries and submit data thereon (name, date of birth, country of residence, control position) to the Commercial Register.
- Obligated person within the meaning of the law3, will have access to this data free of charge. Data will be available to others (third parties) on a paid basis and with no restrictions as well!
- If there is no data on individual beneficiaries, the member of the Board of a commercial company will be regarded as the beneficiary.
- Transfer of data on account holders to state institutions will be regulated in the banks in a similar way.
According to the draft law, legislative amendments shall come into force by June 26, 2017, subject to the following exceptions:
- the register of beneficiaries will only be created by September 15, 2017;
- data on account holders will be transferred to authorized institutions no earlier than January 1, 2019;
- a new procedure for submitting information to the Financial Intelligence Unit shall be established by July 1, 2018.
It should be noted that after entering data on beneficiaries in the Commercial Register, the obligated person will no longer be able to register data on beneficiaries in its system by only referring to the client, that is the verification of data in the register will be mandatory for all.
For those violating money laundering procedures, there will be a sort of ‘wall of shame’ (in addition to other ‘troubles’ in the form of severe penalties) with public lists of violators posted on the websites of the Financial Supervision and the Police and Border Guard Board.
NB! Legal regulations described in this article are not final and definitive. It should be noted that amendments and additions could still be made in the process of enacting the Law!