What is an obliged institution?

An obliged institution is an entity specified in Article 2 of the Act on Counteracting Money Laundering and Terrorist Financing, which is subject to certain AML/CFT obligations. These are not limited to banks and other financial institutions. The Act also covers selected professions and non-financial activities, including certain legal, tax and accounting services, real estate intermediation, gambling activities, and certain types of trade and services.

In some cases, the status of an obliged institution is not determined solely by the industry or the company’s name. What may matter is the specific type of activity performed, the scope of operations, the value of a transaction, or the fulfilment of other conditions specified in the Act. The status of an obliged institution results from the applicable regulations and the entity’s actual business model – not from its own declaration.

Who can be an obliged institution?

The catalogue of obliged institutions is set out in Article 2(1) of the AML Act and covers both the financial sector and numerous non-financial activities.

Obliged institutions include, among others, certain:

• banks, financial institutions and cooperative savings and credit unions;
• payment institutions and entities connected with electronic money;
• capital market entities, investment funds and their managers;
• insurance sector entities to the extent specified in the Act;
• entrepreneurs conducting currency exchange activities and certain currency exchange services;
• entities providing services relating to virtual currencies as specified in the Act;
• notaries;
• advocates, attorneys-at-law, foreign lawyers and tax advisers – to the extent of the activities specified in the Act;
• statutory auditors;
• entities providing certain accounting and tax services;
• entrepreneurs providing certain services to companies and trusts;
• real estate agents;
• entities conducting gambling activities;
• entrepreneurs providing safe-deposit boxes;
• entrepreneurs conducting certain activities related to works of art, collectors’ items and antiques;
• lending institutions;
• entrepreneurs conducting pawnshop activities;
• certain entities servicing loans.

In certain cases, the Act also covers foundations, associations, and entrepreneurs accepting or making certain cash payments. This list is indicative. The complete and legally binding catalogue is set out in Article 2(1) of the AML Act.

Is every company in a given industry an obliged institution?

No. For some categories, the Act links the status of an obliged institution to the performance of specific activities, a defined scope of business, or the fulfilment of additional conditions. Legal professions are a good example. The mere fact of practising as an advocate or attorney-at-law does not mean that every activity performed is subject to AML/CFT obligations.

The Act specifies particular types of activities in connection with which these provisions apply. Similarly, not every foundation or association becomes an obliged institution solely because of its legal form.

In other cases, relevant factors may include, among other things:

• the type of service provided;
• the nature of the activity performed;
• the value of the transaction;
• the amount of rent in certain types of intermediation relating to lease or tenancy;
• the manner in which payments are made or accepted;
• other conditions specified in the relevant point of Article 2 of the AML Act.

Therefore, the statement “the company operates in industry X, so it is an obliged institution” may be an oversimplification.

The classification depends on the actual business model assessed against the specific legal provision.

What obligations does an obliged institution have?

If an entity is an obliged institution, it must comply with the AML/CFT obligations provided for in the Act. Depending on the type of activity and the applicable provisions, these may include, among other things:

• identifying and assessing money laundering and terrorist financing risks;
• applying customer due diligence measures;
• identifying and verifying the customer;
• identifying and verifying the beneficial owner;
• assessing the purpose and nature of business relationships;
• ongoing monitoring of relationships and transactions;
• maintaining and applying an AML/CFT procedure;
• appropriately assigning responsibility for the performance of AML obligations;
• training employees;
• documenting assessments and actions taken;
• retaining required information and documents;
• fulfilling certain reporting and notification obligations towards the General Inspector of Financial Information (GIIF).

This does not mean that every obliged institution performs all obligations in exactly the same way. Their scope and manner of implementation depend, among other things, on the type of activity, the applicable provisions, and the identified risk.

How can you check whether a company is an obliged institution?

The analysis should not begin solely with the name of the industry, the PKD code, or a ready-made list found online. In practice, it is useful to go through four steps:

1. Determine what the entity actually does.
   The services actually provided and activities actually performed must be identified.
2. Find the relevant point of Article 2(1) of the AML Act.
   It should be verified whether the actual activity corresponds to one of the categories specified by the legislator.
3. Check the scope, conditions, thresholds and exclusions.
   Some provisions cover an entity only in relation to specific activities or after additional conditions have been met.
4. Determine the resulting AML/CFT obligations.
   Only after the entity has been correctly classified can it be determined which processes, procedures and measures should be implemented.

The framework can therefore be simplified as follows:

actual activity → relevant point of Article 2 → conditions and exclusions → status as an obliged institution → AML/CFT obligations.

The key issue is therefore not how the company describes its business, but what it actually does and whether that activity falls within the scope specified by the AML Act.