New areas of unqualified trade
With the transposition of new EU rules aiming to prevent the use of financial systems for money laundering or the financing of terrorism into Czech law, new activities were added to ‘unqualified trade’ under the Trade Licensing Act on 1 January 2021: the provision of services for legal entities and trusts, and the provision of services related to virtual assets.
The new activities are subject to stricter obligations than other areas within the unqualified trade. If either activity is to be carried out by a corporate entity, a clean criminal record is required for the entity’s beneficial owner (as per the act on registration of beneficial owners) and any person who is a member of its statutory body, a representative of a corporate entity in such a body or a person in a position similar to that of a member of the statutory body. This means that in addition to other required enclosures, a list with the names of such persons must be attached when notifying the activity, unless such data can be obtained from a public register or from the register of beneficial owners; for foreign nationals, a certificate verifying their clean criminal record in their homeland is also required.
On 1 July 2021, an amendment to the government decree on the content of individual trades entered into effect, which defines the newly added areas of the activity in more specific terms. The provision of services for legal entities and trusts includes, e.g., acting on behalf of a client in the management or operation of a business corporation, and acting on behalf of a client in raising and collecting funds for the purpose of establishing, managing or controlling a business corporation. Also included are acting on behalf of a client in the establishment or management of a trust and services related to the formation of a trust, arranging for the registration of a trust in the register of trusts, facilitating the conclusion of a contract for the setting aside of property by entrusting it to the administration of a trustee, drafting such a contract or mortis causa disposition, setting aside property by entrusting it to the administration of the trustee, or drafting of the trust’s statute. In contrast, the activity of notaries, the practice of advocates under the Act on Advocacy, the provision of investment services, the provision of payment services or real estate brokerage do not fall under this area of activity.
Services related to virtual assets include, in particular, the purchase, sale, exchange, safekeeping, management for another, transfer or brokering of the purchase or sale of a virtual asset, the issue of a virtual asset, the lending of a virtual asset other than consumer credit, as well as the provision of financial services relating to the offer or sale of a virtual asset and the provision of other similar services related to a virtual asset. In contrast, neither the actual extraction of a virtual asset nor the confirmation of transactions in a virtual asset fall under this area of activity.
We recommend that trustees and other involved persons make sure they comply with the new obligations by notifying these activities and ensuring the specified persons’ clean criminal record to avoid penalties or restrictions of operations.