AML changes about to be finalised

Although the deadline for the implementation of the fourth and fifth AML Directives has already expired, the Czech Republic has not yet adopted adequate implementing regulations and is now facing infringement proceedings from the European Commission. Both legislative proposals should therefore be adopted swiftly. The new Act on the Registration of Beneficial Owners, and a major amendment to the AML Act and related regulations are heading to their second and third readings in the chamber of deputies.

The first bill introduces significant changes to the AML Act. These include: an extension of the range of obliged entities; changes to the process of client identification and review; a reform of administrative punishments; changes to the scope of powers of supervisory authorities; and a change in the data collected in the central accounts.

To better meet EU requirements, the register of beneficial owners will be moved to a separate piece of legislation. So far, the regulation has been fragmented between the AML Act and the Public Registers Act. Among other things, the new law introduces the publishing of certain data on beneficial owners and substantial penalties for non-compliance with certain registration obligations. Substantial changes are being made to the beneficial owner definition, and some problematic issues are being regulated in more detail.

Because of the above mentioned sanctions that obliged entities face should they fail to comply with their responsibilities under the AML Act (for more information, refer to article here), we recommend checking the setup of internal processes in the client review/monitoring area, i.e. whether they are in line with the new legislation and with the standpoint of the administrative bodies; for example, the Financial Analysis Office has recently further adapted the rules for the identification of minors.

The amendments will also affect the regulation of trusts; under the new bill, the determination of the beneficial owner will differ from the current concept.

We will be happy to advise you on what to watch out for upon transitioning to the new legislation, and what deadlines to observe when making the data registered in the register of beneficial owners compliant with the new regulations. 

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