Wondering why in financial institutions, when signing any contract, loan, account opening or deposit, there was an additional question „Are you a politically exposed person”?
On July 13, 2018, the new Anti-Money Laundering and Countering the Financing of Terrorism Law came into effect. The new regulations are an implementation, under Polish law, of the EU regulations set forth in the so-called. Fourth AML(Anti-Money Laundering) Directive.
May 15, 2021. an amendment to the law came into force making the changes specified in the EU Directive 2018/843 of May 30, 2018. On preventing the use of the financial system for money laundering or terrorist financing, the so-called. Fifth AML Directive. This article has been modified for the new regulations.
Key information worth remembering about politically exposed persons:
- In financial institutions, when signing contracts, loans, opening bank accounts and deposits, the question of whether the customer is a politically exposed person has arisen, as a result of Poland’s Anti-Money Laundering and Countering the Financing of Terrorism Act.
- Politically exposed persons include. Heads of state, government, ministers, deputy ministers and persons holding prominent public positions.
- A list of domestic public positions and functions that are considered politically exposed positions is set forth in the AML/CFT Law.
Who is a politically exposed person?
One of the requirements set forth in the regulations is the obligation to determine whether the persons with whom a financial institution (including a bank) intends to enter into an agreement occupy a Politically Exposed Person (PEP) as defined by the Act. Until the law was amended in 2018, the obligation existed in the law but was limited only to those residing outside the country, meaning that it applied to a small group of people. The provisions of the 2018 law significantly increased the catalog of persons covered by the provisions on the determination of politically exposed persons.
NOTE!!! A person holding a politically exposed position is also subject to the regulations for a minimum of 12 months from the date he or she no longer holds that position.
Definition of politically exposed person
The concept of politically exposed persons (according to Law 2021) includes individuals who hold significant positions or perform significant public functions, and includes:
- Heads of state, heads of government, ministers, deputy ministers, secretaries of state (including the President of the Republic of Poland, the Prime Minister);
- Members of parliament or similar legislative bodies (deputies and senators);
- members of the governing bodies of political parties;
- members of supreme courts, constitutional tribunals and other high-level judicial bodies whose decisions are not subject to appeal, except in extraordinary modes (judges of the Supreme Court, Constitutional Court, Supreme Administrative Court, provincial administrative courts and judges of appellate courts);
- members of the tribunals of audit or the boards of directors of central banks (the President and members of the NBP Board);
- ambassadors, charges d’affaires and senior officers of the armed forces;
- members of administrative, management or supervisory bodies of state-owned enterprises (directors) and companies with State Treasury participation (members of management and supervisory boards), in which more than half of the shares or stocks belong to the State Treasury or other state legal entities,
- directors, deputy directors and members of bodies of international organizations or persons performing equivalent functions in such organizations,
- General directors in the offices of chief executive and central state bodies, general directors of provincial offices;
- other persons holding public positions or performing public functions in state bodies or central government administration bodies.
Family and associates of a politically exposed person
This obligation also applies to those who are a family member or a person known to be a close associate of a politically exposed person. Persons who are family members are considered to be: a spouse or cohabitant with such a person, children and their spouses or cohabitants, and parents.
The law defines a group of persons who are close associates of politically exposed persons. These are individuals who are the so-called „natural persons”. the beneficial owners of legal entities, unincorporated entities or trusts (including those known to have been established for the purpose of obtaining an actual benefit from a PEP) jointly with a PEP or having other close business relationships with such a PEP. In much simpler terms, a beneficial owner is an individual who directly or indirectly controls an entity (including another individual) by taking actions or activities on its behalf that involve, among other things. On entering into contracts or making transactions. An entry detailing the concept of a beneficial owner is available here.
In practice, this means that persons who act in various forms of cooperation with a politically exposed person, e.g. by conducting a business jointly or on his behalf, a commercial company, e.g. holding shares, shares in companies, voting rights at general meetings of shareholders, are also subject to the above provisions.
Below is a simplified diagram of the links:
What are the responsibilities of a politically exposed person?
It is advisable to be aware of the above regulations, as this will protect you from the consequences of making a false statement to the bank under penalty of criminal liability. Banks verify customers for this using external, both domestic and international databases.
If you do not meet the definitions, you are not a member of the immediate family, a cooperating person then you should not answer „yes.”
However, if you are a politically exposed person then you can expect additional questions and the need to submit additional documents. This is because the bank, as required by the law, must apply increased financial security measures. Remember that refusal to answer or provide documents will result in a disagreement or transaction. Each case must be considered on a case-by-case basis, cannot be subject to automatic approval, and requires the approval of „senior management,” which can be either a member of the board, a director or an employee qualified in money laundering risk.
List of national public positions and functions that are politically exposed positions
The Fifth AML Directive made it mandatory to publish and update the list of public positions and functions defined as politically exposed positions in the country. The definition of politically exposed person no longer mentions by name those holding the most important positions in the state or specific names of institutions, and now refers precisely to national legislation. A closed catalog has been developed within the framework of the Finance Minister’s decree, which removes any doubts that may arise vis-à-vis the qualification of persons. The definition excludes groups of middle and lower level positions, including heads of offices of field government special administration bodies.
July 29, 2021. The Decree of the Minister of Finance, Funds and Regional Policy on the list of national public positions and functions that are politically exposed positions has been published. The regulation enters into force on October 31, 2021. The published list of those considered to hold a politically exposed position contains as many as 215 items. The list is very broad and includes people holding such positions as m. in. The mayor, mayor, mayor and his deputy, directors of government offices and their deputies.
Below is the complete list:
- 1) President of the Republic of Poland
- 2) Chairman of the Council of Ministers
- 3) vice-president of the Council of Ministers
- 4) minister
- 5) Secretary of State
- 6) undersecretary of state
- 7) MP
- 8) senator
- 9) Member of the European Parliament
- 10) member of a body representing a political party externally registered in the register of political parties, kept by the District Court in Warsaw
- 11) a member of a body of a political party entered in the register of political parties, kept by the District Court in Warsaw, authorized to incur property obligations
- 12) judge of the State Court
- 13) judge of the Supreme Court
- 14) judge of the Constitutional Court
- 15) judge of the Supreme Administrative Court
- 16) judge of the Court of Appeal
- 17) President of the National Bank of Poland
- 18) Member of the Management Board of the National Bank of Poland
- 19) member of the Monetary Policy Council
- 20) Plenipotentiary representative of the Republic of Poland in another country or to an international organization
- 21) chargés d’affaires
- 22) an officer holding an official position in the armed forces of the Republic of Poland classified in the general (admiral) ranks
- 23) plenipotentiary of the Minister of National Defense appointed on the basis of a separate decision of the Minister of National Defense
- 24) director, president of a state-owned enterprise or other equivalent position
- 25) chairman of the supervisory board of a state enterprise
- 26) member of the supervisory board of a state enterprise
- 27) chairman of the board of directors of a company with State Treasury participation, in which more than half of the shares or stocks belong to the State Treasury or other state legal persons
- 28) member of the board of directors of a company with the participation of the State Treasury, in which more than half of the shares or stocks belong to the State Treasury or other state legal persons
- 29) chairman of the supervisory board of a company with State Treasury participation, in which more than half of the shares or stocks belong to the State Treasury or other state legal persons
- 30) member of the supervisory board of a company with State Treasury participation, in which more than half of the shares or stocks belong to the State Treasury or other state legal persons
- 31) director general of the office of the chief state authority
- 32) director general of the office of the central state body
- 33) director general of the provincial office
- 34) Head of the Chancellery of the President of the Republic of Poland
- 35) Head of the Chancellery of the Prime Minister
- 36) Head of the Chancellery of the Sejm
- 37) Head of the Senate Chancellery
- 38) governor
- 39) deputy governor
- 40) marshal of the province
- 41) a member of the provincial board other than the marshal of the province
- 42) mayor, mayor, president of the city
- 43) deputy mayor, mayor and mayor of the city
- 44) starost
- 45) other than the starost, a member of the district administration
- 46) Director General of the National Center for Agricultural Support
- 47) Deputy Director General of the National Center for Agricultural Support
- 48) Director General of State Forests
- 49) Deputy Director General of State Forests
- 50) Director General of the Prison Service
- 51) Deputy Director General of the Prison Service
- 52) director general of the foreign service
- 53) director general of the office of the chairman of the committee that is part of the Council of Ministers
- 54) director of the National School of Public Administration
- 55) deputy director of the National School of Public Administration
- 56) Director of the Polish Centre for Accreditation
- 57) Deputy Director of the Polish Centre for Accreditation
- 58) director of the Government Security Center
- 59) deputy director of the Government Security Center
- 60) Director of Transport Technical Supervision
- 61) Deputy Director of Transport Technical Supervision
- 62) General Director of National Roads and Highways
- 63) Deputy General Director of National Roads and Highways.
- 64) General Director of Environmental Protection
- 65) deputy of the General Director of Environmental Protection
- 66) General Inspector of Financial Information
- 67) Chief Land Surveyor
- 68) deputy chief surveyor of the country
- 69) Chief Pharmaceutical Inspector
- 70) Deputy Chief Pharmaceutical Inspector
- 71) Chief Inspector of Commercial Quality of Agricultural and Food Articles
- 72) Deputy Chief Inspector of Commercial Quality of Agricultural and Food Articles
- 73) Chief Inspector of Construction Supervision
- 74) Deputy Chief Inspector of Construction Supervision.
- 75) Chief Inspector of Plant and Seed Protection
- 76) Deputy Chief Inspector of Plant and Seed Protection
- 77) Chief Inspector of Environmental Protection
- 78) Deputy Chief Inspector of Environmental Protection
- 79) Chief Labor Inspector
- 80) Deputy Chief Labor Inspector
- 81) Chief Sanitary Inspector
- 82) Deputy Chief Sanitary Inspector
- 83) Chief Inspector of Road Transport
- 84) Deputy Chief Inspector of Road Transport
- 85) Chief Veterinarian
- 86) Deputy Chief Veterinarian
- 87) Chief Ombudsman for Financial Discipline
- 88) Deputy Chief Ombudsman for Financial Discipline.
- 89) Chief Commander of the State Fire Service
- 90) Deputy Chief Commandant of the State Fire Service
- 91) Chief of Police
- 92) Deputy Chief of Police
- 93) Commander-in-Chief of the Border Guard
- 94) Deputy Commander-in-Chief of the Border Guard
- 95) Commander of the State Protection Service
- 96) Deputy Commander of the State Protection Service
- 97) Chief Director of the State Archives
- 98) deputy of the Chief Director of the State Archives
- 99) President of the Military Property Agency
- 100) deputy chairman of the Military Property Agency
- 101) President of the Agency for the Restructuring and Modernization of Agriculture
- 102) Deputy President of the Agency for Restructuring and Modernization of Agriculture
- 103) President of the Bureau for Chemical Substances
- 104) President of the Central Office of Weights and Measures
- 105) vice-president of the Central Office of Weights and Measures
- 106) President of the Central Statistical Office
- 107) vice president of the Central Statistical Office
- 108) President of the Institute of National Remembrance – Commission for the Prosecution of Crimes against the Polish Nation
- 109) Deputy President of the Institute of National Remembrance – Commission for the Prosecution of Crimes against the Polish Nation
- 110) President of the Agricultural Social Insurance Fund
- 111) Deputy President of the Agricultural Social Insurance Fund
- 112) President of the National Property Resource
- 113) deputy chairman of the National Real Estate Resources
- 114) President of the Supreme Audit Office
- 115) vice president of the Supreme Audit Office
- 116) member of the College of the Supreme Audit Office
- 117) President of the National Health Fund
- 118) Deputy President of the National Health Fund
- 119) President of the State Water Management Company Wody Polskie
- 120) Deputy President of the State Water Management Company Wody Polskie
- 121) President of the State Atomic Energy Agency
- 122) vice-president of the State Atomic Energy Agency
- 123) President of the Polish Space Agency
- 124) vice-president of the Polish Space Agency
- 125) President of the Polish Audit Supervision Agency
- 126) Deputy Chairman of the Polish Audit Supervision Agency
- 127) President of the Polish Agency for Enterprise Development
- 128) Deputy President of the Polish Agency for Enterprise Development
- 129) President of the Polish Tourist Organization
- 130) vice president of the Polish Tourist Organization
- 131) President of the General Prosecutor’s Office of the Republic of Poland
- 132) vice-president of the General Prosecutor’s Office of the Republic of Poland
- 133) President of the Government Legislation Center
- 134) vice president of the Government Legislation Center
- 135) Chairman of the Government Agency for Strategic Reserves
- 136) Deputy Chairman of the Government Strategic Reserve Agency
- 137) President of the Office of Technical Inspection
- 138) Vice President of the Office of Technical Inspection
- 139) President of the Office of Electronic Communications
- 140) Deputy Chairman of the Office of Electronic Communications
- 141) President of the Civil Aviation Authority
- 142) vice president of the Civil Aviation Authority
- 143) President of the Office for Personal Data Protection
- 144) deputy chairman of the Office for Personal Data Protection
- 145) President of the Office of Competition and Consumer Protection
- 146) vice president of the Office of Competition and Consumer Protection
- 147) President of the Patent Office of the Republic of Poland
- 148) Deputy President of the Patent Office of the Republic of Poland
- 149) President of the Energy Regulatory Authority
- 150) vice-president of the Energy Regulatory Authority
- 151) President of the Office for Registration of Medicinal Products, Medical Devices and Biocidal Products
- 152) Vice President of the Office for Registration of Medicinal Products, Medical Devices and Biocidal Products
- 153) President of the Railway Transport Authority
- 154) vice-president of the Railway Transport Authority
- 155) President of the Public Procurement Office
- 156) vice president of the Public Procurement Office
- 157) President of the Higher Mining Authority
- 158) vice-president of the Higher Mining Authority
- 159) President of the Social Insurance Institution
- 160) member of the Board of Directors of the Social Insurance Institution
- 161) President of the Management Board of Bank Gospodarstwa Krajowego
- 162) vice-president of the Management Board of Bank Gospodarstwa Krajowego
- 163) member of the Management Board of Bank Gospodarstwa Krajowego
- 164) President of the Board of the National Fund for Environmental Protection and Water Management
- 165) Deputy Chairman of the Board of the National Fund for Environmental Protection and Water Management
- 166) President of the Management Board of the State Fund for Rehabilitation of Persons with Disabilities
- 167) Deputy Chairman of the Board of the State Fund for Rehabilitation of Persons with Disabilities
- 168) Attorney General
- 169) Deputy Prosecutor General
- 170) National Prosecutor
- 171) Chairman of the Financial Supervision Commission
- 172) Deputy Chairman of the Financial Supervision Commission
- 173) member of the Financial Supervision Commission
- 174) Chairman of the State Commission for clarification of cases of actions against sexual freedom and morality against a minor under 15 years of age
- 175) member of the State Commission for the investigation of cases of acts against sexual freedom and morality against a minor under 15 years of age
- 176) Chairman of the National Broadcasting Council
- 177) deputy chairman of the National Broadcasting Council
- 178) member of the National Broadcasting Council
- 179) Chairman of the State Election Commission
- 180) deputy chairman of the State Election Commission
- 181) Member of the State Election Commission
- 182) chairman of the Council for Refugees
- 183) Vice President of the Council for Refugees
- 184) Chairman of the National Media Council
- 185) member of the National Media Council
- 186) Financial Ombudsman
- 187) deputy of the Financial Ombudsman
- 188) Ombudsman for Small and Medium Enterprises
- 189) Deputy Ombudsman for Small and Medium Enterprises
- 190) Ombudsman for Children
- 191) Deputy Ombudsman for Children’s Rights
- 192) Ombudsman
- 193) Deputy Ombudsman
- 194) Patient Ombudsman
- 195) Deputy Ombudsman for Patients’ Rights
- 196) Head of the Internal Security Agency
- 197) deputy head of the Internal Security Agency
- 198) Head of the Intelligence Agency
- 199) deputy head of the Intelligence Agency
- 200) Head of the National Security Bureau
- 201) Deputy Head of the National Security Bureau
- 202) Head of the Central Anti-Corruption Bureau
- 203) Head of the National Election Bureau
- 204) Head of the National Fiscal Administration
- 205) Deputy Head of the National Fiscal Administration
- 206) Head of the Civil Service
- 207) Head of the Military Counterintelligence Service
- 208) deputy head of the Military Counterintelligence Service
- 209) Head of the Military Intelligence Service
- 210) deputy head of the Military Intelligence Service
- 211) Head of the Foreign Service
- 212) Head of the Office for Foreigners
- 213) Deputy Head of the Office for Foreigners
- 214) Head of the Office for Veterans and Repressed Persons Affairs
- 215) Deputy Head of the Office for Veterans and Repressed Persons.
Given the magnitude of the abuses that occur, bearing the hallmarks of money laundering, state authorities must have the tools to investigate the transactions of politically exposed persons as particularly vulnerable to the temptation to accept financial benefits. As part of the monetary trading system, financial institutions have been obliged to perform activities to eliminate the possibility of transactions that would involve money laundering. Most important in this process is the proper identification of individuals, analysis of transactions and the personal connections that occur, as well as the sources of assets.
