Being competent, pursuant to Article 12(1)(11) of the Act of 1 March 2018 on Counteracting Money Laundering and Financing of Terrorism (Journal of Laws of 2021, item 1132, as amended) – hereinafter referred to as the “AML Act”, to share knowledge and information regarding provisions on counteracting money laundering and financing of terrorism, the General Inspector of Financial Information – hereinafter referred to as the “General Inspector”, draws attention to the following issues.
 
I.    Selected provisions of the Act on Counteracting Money Laundering and Financing of Terrorism.
Pursuant to Article 34(1)(2) of the AML Act, the customer due diligence measures shall include:
•    identification of the beneficial owner and taking reasonable steps to verify its identity,
•    identification of the beneficial owner and taking reasonable steps to determine the ownership and control structure – in the case of a customer that is a legal person, organisational unit without legal personality or a trust.
Pursuant to Article 37(3) of the AML Act, when applying the customer due diligence measure referred to in Article 34(1)(2), obligated institutions shall not rely solely on information from the Central Register of Beneficial Owners or the register referred to in Article 30 or Article 31 of Directive 2015/849, kept in the relevant Member State.
Pursuant to Article 61a(1) of the AML Act, an obligated institution shall:
•    record discrepancies between the information collected in the Central Register of Beneficial Owners and the information about the customer’s beneficial owner determined by it, and
•    take steps to explain the reasons for these discrepancies.
In the light of Article 61a(2) of the AML Act, if the recorded discrepancies are confirmed, the obligated institution shall provide the authority competent for the Register with verified information regarding these discrepancies along with the substantiation and documentation regarding the recorded discrepancies.
Pursuant to Article 50(2)(10) of the AML Act, the internal procedure in place at the obligated institution shall define, taking the nature, type and scale of its business activity into account, the rules of conduct followed in the obligated institution and includes, in particular, the rules for recording discrepancies between the information collected in the Central Register of Beneficial Owners and the information about the customer’s beneficial owner determined through the application of the AML Act.
 
II.    Practical aspects of applying the customer due diligence measure referred to in Article 34(1)(2) of the AML Act.
Obligated institutions are required to identify each beneficial owner of the customer and take reasonable steps to verify its identity and determine the customer’s ownership and control structure.
According to the General Inspector, in order to properly perform the imposed obligation, it is advisable to get acquainted with the information on beneficial owners that has been reported to the Central Register of Beneficial Owners by entities referred to in Article 58(1)-(13) of the AML Act. When reporting information on beneficial owners to Central Register of Beneficial Owners, these entities should rely on their internal information and documents, e.g. the company’s valid corporate documents, excerpts from relevant foreign registers or documents confirming the company’s ownership structure.
Therefore, when applying any customer due diligence measure, the obligated institution should take into account the information collected in the Central Register of Beneficial Owners. This information can help set the direction of further reasonable steps to verify the identity of the beneficial owner and determine the customer’s ownership and control structure. It should also be remembered that from the point of view of the obligations imposed on obligated institution, it would be wrong to rely solely on information from the Central Register of Beneficial Owners.
 
III.    The process of recording discrepancies and communicating information to the authority competent for issues related to fulfilling obligations regarding the application of the customer due diligence measures.
Referring to Article 61a(1) of the AML Act, it needs to be indicated that an obligated institution shall:
•    apply the customer due diligence measure specified in Article 34(1)(2)(a) of the AML Act, consisting in the identification of the beneficial owner and taking reasonable steps to verify its identity,
•    apply the customer due diligence measure specified in Article 34(1)(2)(b) of the AML Act, consisting in the identification of the beneficial owner and taking reasonable steps to determine the ownership and control structure – in the case of a customer that is a legal person, organisational unit without legal personality or a trust,
•    identify and record discrepancies between the information collected in the Central Register of Beneficial Owners and the determined information on the customer’s beneficial owner (the internal procedure in place at the obligated institution should include the rules for recording discrepancies),
•    take steps to explain the reasons for the discrepancies (for example, contact the customer, establish the method of determining the beneficial owner by the customer, explain the method of establishing the ownership and control structure by the customer, explain whether the method of determining the beneficial owner and the customer ownership and control structure by the obligated institution was correct, establish why the customer considered a given person to be its beneficial owner, collect new information and documents),
•    confirm the recorded discrepancies (for example, confirm that the obligated institution did not make a mistake in establishing the beneficial owner and the ownership and control structure of the customer, if possible, confirm that the information on the beneficial owners in the Central Register of Beneficial Owners is not correct, confirm the reasons for the discrepancies, determine whether the discrepancy is apparent or actual), 
•    draw up the reasons for the discrepancies (for example, indicate and document the steps taken by the obligated institution to identify and verify the customer’s beneficial owner and the customer’s ownership and control structure, the information and documents based on which the customer’s beneficial owner and the customer’s ownership and control structure were determined, the information or documents based on which the discrepancies were found, the steps taken by the institution to confirm the recorded discrepancies, the information that the institution received in the course of confirming the recorded discrepancies, the conclusions drawn from the analysis of the collected information and documents, the reasons why the obligated institution considered the discrepancy actual),  
•    provide the competent authority with verified information on these discrepancies along with the substantiation and documentation regarding the recorded discrepancies – the institution shall submit the substantiation drawn up in accordance with the instructions indicated above and send the complete documentation related to the establishment of the beneficial owner and confirmation of the discrepancies.

IV.    Definition of a beneficial owner
The General Inspector reminds that the statutory definition of a beneficial owner referred to in Article 2(2)(1) of the AML Act, consists of a non-exhaustive list, and the enumeration of potential beneficial owners included in points (a)-(c) of this provision serves as an example.
Therefore, both the obligated institution and the entity reporting information about beneficial owners to the Central Register of Beneficial Owners analyse all the premises included in the definition of a beneficial owner and identify each natural person exercising direct or indirect control over the customer through their powers resulting from legal or factual circumstances, enabling them to exert a critical impact on the activities or actions taken by the company.
It should also be reminded that the identification of the beneficial owner pursuant to Article 2(2)(1)(a)-(c) of the AML Act, does not exclude the obligation to indicate as the beneficial owner also another person who can exert a critical impact on the activities or actions taken by the customer in accordance with the overall part of the definition referred to in Article 2(2)(1) of the AML Act (introduction to the enumeration[1]).
•    Example
The obligated institution has determined that the beneficial owners of its customer, i.e. a limited liability company, are partner A (natural person) holding 40% of shares and partner B (natural person) holding 40% of shares. The institution verified the beneficial owners based on an excerpt from the customer’s entry in the National Court Register. The customer reported to the Central Register of Beneficial Owners partner A holding 40% of the shares, partner B holding 40% of the shares and partner C (natural person) holding 20% of the shares. The obligated institution requested the customer to amend the entry in the Central Register of Beneficial Owners. Then, the institution informed the competent authority that the data in the Central Register of Beneficial Owners was incorrect and sent an excerpt from the customer’s entry in the National Court Register and a printout from the website of the Central Register of Beneficial Owners.
•    Assessment of the steps taken by the obligated institution
The steps taken by the obligated institution should be assessed negatively.
The obligated institution failed to satisfy the statutory obligation consisting in taking steps to explain the reasons for the discrepancies – it did not verify the information about these discrepancies and did not send a substantiation.
The obligated institution also failed to satisfy the statutory obligation to apply the customer due diligence measure referred to in Article 34(1)(2) of the AML Act.
It should also be noted that no provision of the AML Act empowers the obligated institution to request the customer to amend the information on beneficial owners reported to the Central Register of Beneficial Owners.
•    Correct/recommended steps to be taken by the obligated institution
It should be emphasised that the obligated institution is required to apply the customer due diligence measure referred to in Article 34(1)(2) of the AML Act. Therefore, the institution should not automatically assume that the information collected in the Central Register of Beneficial Owners is incorrect.
Having identified discrepancies, the obligated institution should verify and update its own information and documents, and, in particular, analyse whether it has:
o    correctly identified the customer’s beneficial owner,
o    taken sufficient and correct steps to verify the identity of the beneficial owner,
o    taken sufficient and correct steps to establish the customer’s ownership and control structure.
Then, the obligated institution may, for example, request the customer to submit additional explanations, information or documents – e.g. articles of association of a limited liability company. It is worth noting that in the light of the provisions of the Code of Commercial Companies, the articles of association may provide for preference shares (entitling, e.g. to preferential voting rights). Preference shares may also be associated with additional specific rights of a partner (e.g., the right to appoint members of the company’s governing bodies). Depending on the specific facts of the case, the partner’s specific rights should be taken into account when the beneficial owner is being determined. Failure to take these rights into account may result in failure to identify one of the beneficial owners, which will be tantamount to incorrect application of the customer due diligence measure.  
Incidentally, it is worth noting that pursuant to Article 153(1) of the AML Act, entities obliged to report information to the Central Register of Beneficial Owners that have provided information inconsistent with the facts, are subject to a fine of up to PLN 1,000,000. Thus, obligated institutions should assume that customers have reliably approached the issue of determining the beneficial owner and should not assume in advance that customers have erroneously reported information on their beneficial owners to the Central Register of Beneficial Owners. Any ambiguities should be eliminated by the application of the customer due diligence measures. 
 
V.    Rationale for the Act of 30 March 2021 Amending the Act on Counteracting Money Laundering and Financing of Terrorism and certain other acts (the issue of actual and apparent discrepancies).
The claims presented in this Communication are confirmed by the rationale for the Act, in which the legislator indicated that “Article 61a(1) of the AML Act imposes on obligated institutions the obligation to record any discrepancies between the facts concerning the customer, determined by the obligated institution, and the data available in the Central Register of Beneficial Owners. The obligated institution will also have to take appropriate steps to clarify the identified discrepancies, and in case of their confirmation – provide the authority competent for the register with information about the discrepancies, along with the rationale therefor. The introduced provisions are aimed at ensuring the minimum level of commitment on the part of obligated institutions to the clarification of identified discrepancies, which is to separate cases of actual discrepancies, resulting from incorrect data entered in the Central Register of Beneficial Owners, from apparent discrepancies. An apparent discrepancy may occur, for example, when a correct entry in the Central Register of Beneficial Owners indicating a change in the owner of a legal person is made, where such change has not yet been recorded in the National Court Register. Reporting apparent discrepancies by obligated institutions would be undesirable because it could significantly extend the time of processing reports concerning actual discrepancies in Central Register of Beneficial Owners.”
 
VI.    Practical aspects of recording discrepancies in the context of fulfilling obligations relating to the application of the customer due diligence measures.
Any obligated institution is required to record discrepancies between the information collected in the Central Register of Beneficial Owners and the information on the customer’s beneficial owners determined by this institution.   
First of all, it should be pointed out that the different types of discrepancies include failure to report information on beneficial owners to the Central Register of Beneficial Owners. Each entity obliged to report information to the Central Register of Beneficial Owners has a beneficial owner, thus failure to report any beneficial owner to the Central Register of Beneficial Owners will be tantamount to a discrepancy, as reporting no information to the Central Register of Beneficial Owners should be understood as the customer’s declaration that a given natural person is not the beneficial owner of the entity required to report information to the Central Register of Beneficial Owners. It should be remembered that entities obliged to report information on beneficial owners to the Central Register of Beneficial Owners are listed in Article 58 of the AML Act. Any obligated institution must properly treat both cases where the customer is an entity obliged to report information to the Central Register of Beneficial Owners and cases where the entity is not such an entity. For example, an ordinary association (not subject to entry in the National Court Register) is an entity that is not obliged to report information to the Central Register of Beneficial Owners.
Noting discrepancies does not consist merely in a simple and mechanical comparison of the information collected in the Central Register of Beneficial Owners with an excerpt from the customer’s entry in the National Court Register. Taking into account the time needed to disclose the information in an excerpt from the National Court Register and the potential gaps or errors in an excerpt from the customer’s entry in the National Court Register (e.g. missing entry of the amount of the customer’s shares, incorrect name, obvious typos), the obligated institution should verify other documents – for example, the company’s articles of association or agreements on the transfer of ownership of the company shares.
However, obligated institutions are not required to compare the information on statutorily authorised persons who have reported information to the Central Register of Beneficial Owners with the data of persons belonging to the body authorised to represent the entity (indicated in the excerpt from the National Court Register). The obligated institution records discrepancies between the information collected in the Central Register of Beneficial Owners and the information about the customer’s beneficial owner determined by it and takes steps to explain the reasons for these discrepancies. Therefore, any information on doubts concerning persons reporting to the Central Register of Beneficial Owners is not covered by the obligation referred to in Article 61a of the AML Act. The identification of such doubts should, however, be taken into account as part of the application of the customer due diligence measures.
 
VII.    Practical information on providing the competent authority with information on discrepancies in the context of fulfilling obligations related to the application of the customer due diligence measures.
Having regard to the foregoing, providing the competent authority by obligated institutions with:
•    information about any minor spelling mistakes in the Central Register of Beneficial Owners (for example, an obvious typo in the name of the beneficial owner),
•    information about any inaccuracies in the excerpt of the customer’s entry in the National Court Register (for example, a negligible error in the value of the customer’s shares),
•    information about failure to report information to the Central Register of Beneficial Owners by entities that are not obliged to make such reports (for example, an ordinary association),
•    information about inaccuracies that do not affect the determination of the beneficial owner (for example, failure to enter the beneficiary’s middle name)
– should be considered undesirable.

What also needs to be negatively assessed is providing the competent authority by obligated institutions with:
•    unverified information on discrepancies,
•    information without or with insufficient reasons for doing so.
 
VIII.    The issue of the inability to apply one of the customer due diligence measures.
It should be noted that identifying discrepancies between the information collected in the Central Register of Beneficial Owners and that in the excerpt from the customer’s entry in the National Court Register does not always require the application of Article 41 of the AML Act. For example, in case of identifying a specific discrepancy, the obligated institution does not automatically have grounds for refusing to carry out an occasional transaction. The obligated institution is able to identify the beneficial owner, verify its identity and establish the ownership and control structure of the customer based on various documents – not only an excerpt from the customer’s entry in the National Court Register (for example, the company’s articles of association or an agreement on the transfer of the company shares).
Where, based on the analysis of information and documents collected by the obligated institution (verification of information collected in the Central Register of Beneficial Owners and documents presented by the customer), it is not possible to apply the customer due diligence measure consisting in the identification of the beneficial owner, verification of its identity and establishment of the ownership and control structure of the customer, the obligated institution shall:
•    not establish a business relationship,
•    not carry out an occasional transaction,
•    not carry out transactions through the bank account,
•    terminate the business relationship.
 
IX.    Steps envisaged to control obligated institutions.
The General Inspector points out that:
•    failure to identify and record discrepancies,
•    failure to take steps to explain the reasons for discrepancies,
•    failure to confirm recorded discrepancies,
•    failure to prepare rationale for discrepancies,
•    providing the competent authority with unverified information on discrepancies,
•    providing the competent authority with information without or with insufficient reasons for doing so
-    may be indicative of incorrect application of the customer due diligence measure referred to in Article 34(1)(2) of the AML Act. Obtaining information on the occurrence of such cases by the General Inspector may result in undertaking control activities against the obligated institution by entities referred to in Article 130(1) and (2) of the AML Act.
 
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[1] Whenever the Act refers to: beneficial owner – it is understood as any natural person who exercises, directly or indirectly, control over a customer through its powers resulting from legal or actual circumstances, enabling exerting a critical impact on activities or actions undertaken by the customer, or any natural person on whose behalf a business relationship is established or an occasional transaction is conducted, including: (…)