We would like to inform you about the planned extensive amendment to the legislation on the Prevention of Legalization of Proceeds of Criminal Activity and Terrorist Financing, also called in Slovakia as Act on Anti-Money laundering (hereinafter referred to as „Act“). The Amendment is prepared by Ministry of Interior, Ministry of Justice and National Bank of the Slovak Republic, especially with the aim to implement the EU Directive adopted on 20. May, 2015 (also called as „IV. AML Directive) in the Slovak legislation.
The Amendment introduces mainly the following crucial changes:
Decrease of the limit for cash transactions
In compliance with IV. AML Directive, the limit for cash transactions necessary for automatic inclusion of the entrepreneur among so-called obliged persons should be decreased from the current EUR 15 000 to EUR 10 000, regardless whether the transaction is carried out in single operation or in several linked transactions which are or may appear to be connected.
New essentials of Own Activity Programme
Also according to the current legislation, the obliged persons shall prepare in writing and update its Own Activity Programme aimed at prevention of legalization of proceeds of criminal activity. The Amendment should specify the content of Own Activity Programme, which should be in the state language. Moreover, the obligation to update the Own Activity Programme should also arise, and not only in connection with the change of business activity, but also with launch of new products or with a change of the organisation structure of the obliged person.
The crucial change should be also the fact, that the Own Activity Programme should be obligatory approved by statutory body of the obliged person.
In addition, the obliged person should document in its Own Activity Programme, the specified types of unusual transactions that may arise during its business activity (alongside the general types).
Risk assessment should take also other criteria into consideration
The planned legislation should amend the part about the assessment or risks signalising the legalization of income from criminal activities. The obliged person should have to take into consideration also its own risk factors (that should need to be specified especially based on the type of client, goal, regularity and length of business relationship; as well as based on the type of product, value and way of the performance of the business and risk assessment of the country to which the transaction applies) and risk factors which should be specified in the Act (as for example intensive usage of cash, too complicated organisation structure of the client or part in a business relationship in a country with significant rate of corruption).
Extension of obligations in case of the basic client due diligence
Depending on the risk that may exist in the type of transaction and client, there are also currently three different levels of client due diligence: (i) simplified due diligence, (ii) basic client due diligence and (iii) increased client due diligence.
The Amendment should introduce the extension of obligations of the obliged person by the basic client due diligence. The basic client due diligence should always and not only on the basis of the risk of legalization of income from criminal activity as it is now include an identification of the ultimate beneficial owner and adoption of adequate measures to verify the identification, incl. measures to determine the ownership and management structure of the client. In addition, there should arose an to determine and to store information, whether client is not a person on whom international sanctions are imposed.
The obligation to keep up-to-date identification information and to maintain them in a written form for the period of 5 years after the termination of the status of ultimate beneficial owner, should be introduced as well.
Extension of persons to whom the increased due diligence applies
In compliance with the planned Amendment, the increased due diligence should be performed always with regard to the politically exposed person or in cases when the client is not physically present for the purposes of identification and verification. Exception from the face-to-face verification of the identification should be applied only in case of the cumulative fulfilment of the statutory conditions and at the same time, it will depend on each obliged person which other security measures it will take to prevent the legalization, such as for example delivery of the confirmation letter on the address the client has specified in the sent documents, verification of other information about the client from different available sources or the realization only of non-cash transactions or limits of the value of the business.