Money laundering and terrorist prevention – for who and why?

By its nature the money laundering is possession, use and concealment of money received through criminal affairs and money laundering is used to “clean” the illegal assets so that the money could be directed into economic activities. Money laundering itself and being part of it is a criminal offence.

At first sight the Money Laundering and Terrorist Financing Prevention Act (MTFP) may seem difficult and complicated and in most cases people do not even know such law exists. The goal of the MTFP is noble - no to decrease criminality and corruption, defend stability and reliability of economic space and financial systems. The enforcement of law is guided and controlled by Financial Intelligence Unit (FIU).

The law must be enforced and followed by the obligated person stipulated in the MTFP , for example:

• Credit and financial institutions,
• Pawnbrokers and organisers of games of chance,
• persons engaged in the buying-in or wholesale of precious metals,
• auditors, accountants, advisory service providers,
• traders, non-profit associations and foundations, if a cash payment of more than 15000 euros or an equal amount in another currency is made to them,
• providers of trust and company services (for example foundation of a company, enabling use of the address of the seat or place of business, purchase or sale of immovables, enterprises or shares of companies, opening of bank or security accounts, managing clients money, securities and assets, etc).
• And other persons stipulated in the law.

In case your company is obligated person under the law, the company must have written inhouse regulations for prevension of money laundering and terrorist financing, employees must be informed and trained and the company must name the contact person responsible for observing the requirements of the law. Also following requirements must be fulfilled upon establishment of a business relationship or upon making of a transaction, first and foremost:

• identification and verification of the client and its representative, collection of necessary documents (copy of ID card and/or power of attorney, company registry extract),
• identification of the beneficial owner and structure of legal person,
• obtaining information on the purpose and nature of the business relationship and transaction,
• monitoring of the business relationship and renewal of the data, preservation of documents at least 5 years after the termination of business relationship.

The FIU must be informed immediately, but no later than in 2 business days, if you upon performance of economic or professional activities:

• identify an activity or circumstances which might be an indication of money laundering or terrorist financing or an attempt thereof  or
• transaction is made or shall be made where the financial obligation exceeding 32 000 euros or an equal amount in another currency is performed in cash, regardless of whether the transaction is carried out in a single payment or in several linked payments (for example 20 000 + 12 000 euros).

Confidentiality shall be granted for the notifier. In case the obligated person, a member of a directing body and an employee of an obligated person does not fulfill the requirements of MTFP (for example in case of violation of the identification and verification obligation) then the penaly for natural person is up to 300 fine units or detention. If the violation is committed by a legal person then it is punishable by a fine of up to sum of 32 000 euros.

In case you do not know if your company is obligated person under the money laudering and terrorist financing prevention act, the company does not have necessary authorisation or inhouse regulations or you need help training your employees, please do not hesitate to contact us and we shall help you in necessary operations and preparation of documentation.