According to the Czech Financial Analytical Unit (FAU), in the overwhelming majority of inspections — around 80% — violations are recorded in KYC/CDD, transaction monitoring and record-keeping, even at companies that are confident in formal AML compliance. In business terms this means: blocked accounts, delayed payments, increased scrutiny from banks and tangible reputational losses.
Act No. 253/2008 Sb. (the Czech AML law, harmonized with the European AMLD directives) sets strict requirements for KYC in the Czech Republic, identification of the Beneficial Owner, monitoring of suspicious transactions and internal AML control.
I suggest looking at an AML audit in the Czech Republic not as a formal obligation, but as a manageable risk project: it can be structured, consequences can be forecast, and a tangible ROI can be obtained from the right investments. In this guide I will analyze what the FAU uncovers in 80% of cases, how to pass an FAU inspection in the Czech Republic without fines, and how to build a system where AML compliance works in the interest of the business.
If you are responsible for international payments, fintech licenses or VASP structures from Europe, Asia or the CIS, I recommend reading the article to the end: you will receive concrete checklists, a matrix of red flags and a clear set of steps that significantly reduce the risk of blocks and fines.
AML audits in the Czech Republic: what the FAU checks and 80% of findings
FAU inspection in Czechia, it’s not only a request for individual client dossiers. In most cases the regulator assesses the whole system: from the wording of the AML policy to how the AML contact person explains specific decisions on KYC and CDD.
- Insufficient KYC/CDD and weak identification of the Beneficial Owner.
- Inadequate internal AML control and monitoring of suspicious transactions in Czechia.
- Gaps in documentation, data storage and the competencies of responsible officers.
Common KYC and CDD mistakes in the Czech Republic during audits
COREDO’s practice and FAU reviews show: it is KYC and CDD mistakes during audits that make up about a third of all violations.
Typical set of problems:
- Beneficial Owner “on paper” but not in reality. Documents for the beneficial owner exist, but there is no verification of Beneficial Ownership through Czech and European registers, and no reconciliation of the structure with actual cash flows. In one COREDO case a fintech client had to urgently rebuild the BO dossier after the FAU pointed out a mismatch between the declared structure and the data from a foreign register.
- Superficial CDD and EDD for high‑risk clients. Companies with clients from Asian and African countries often lack depth in checking the source of funds and source of wealth: there are general statements and declarations, but no documented history of the origin of funds, especially for large cross‑border transfers.
- The same KYC approach for all clients. A large corporate client with international transactions and a local SME are assessed by the same risk matrix. FAU interprets this as a lack of a risk‑based approach.
- An incomplete set of documents for the FAU. When an inspection begins, companies spend weeks searching for basic KYC forms, address confirmations, contracts and correspondence. This increases the regulator’s suspicion and prolongs the inspection.
- verification of the client’s identity and address using reliable sources (eID, notarized copies, international databases);
- verification of the Beneficial Owner through EU/Czech registers and reconciliation with the actual asset structure;
- a documented methodology for checking source of funds/source of wealth;
- separate procedures for CDD and Enhanced Due Diligence (EDD) for PEP and high‑risk jurisdictions, including sanctions list analysis and PEP screening.
Internal AML control: weak monitoring of transactions
The second major block of violations is internal AML control and monitoring of suspicious transactions in Czechia.
Typical weaknesses:
- Lack of SAR/STR. A company conducts active international activity, but files zero suspicious activity reports (SAR/STR) in a year. For the FAU this is a clear signal: either the transaction monitoring is formal, or suspicious transactions are not recognized.
- Unadjusted monitoring rules and an avalanche of false positives. In companies where basic AML automation and AI transaction monitoring has been implemented, there is often a high share of false positives (up to 15–20% of alerts) that are not investigated or are closed routinely. For the regulator, this means a lack of transaction monitoring rules tuning and weak forensic analytics.
- Absence of real-time sanctions screening. Sanctions list screening is performed periodically rather than in real time. For cross‑border compliance this is a critical risk, especially when dealing with high‑risk jurisdictions.
- Fragmented audit trail and data lineage. Records in AML systems do not allow reconstruction of who and on what grounds made a decision on an alert. In the FAU’s eyes this looks like the absence of a controlled process.
Typical AML violations in the Czech Republic – FAU top‑5 findings
Based on public reports from EU supervisory authorities and FAU practice, the COREDO team identifies five categories that form the basis of those same 80% of findings in AML audits in the Czech Republic:
| Violation | Estimated share within the 80% of cases | Typical consequences |
|---|---|---|
| Insufficient KYC/CDD | ~30% | Account freezes, FAU orders |
| Weak transaction monitoring | ~25% | Fines, enhanced supervision |
| Ineffective or formal AML contact person | ~15% | Demands for replacement, orders |
| Poor data and client file storage | ~5% | Risk of license revocation, fines |
| Ignoring sanctions and PEP risks | ~5% | Reputational damage, de‑risking |
Added to these items are less frequent but dangerous issues: failure to update the AML policy, ignoring the new AML 2025 requirements in the Czech Republic, and weak coordination with internal audit.
Fines for AML violations in the Czech Republic
Act No. 253/2008 Sb. and related legislation expressly enshrine management’s responsibility for AML in the Czech Republic. In most cases this concerns administrative fines of up to millions of CZK, but criminal liability is not excluded in cases of serious and systemic violations.
What COREDO regularly sees:
- Directors and board members bear personal responsibility for implementing effective internal AML controls, appointing a competent contact person, and approving the AML policy.
- Accountants and auditors fall into the FAU’s focus as ‘obliged persons’ with separate AML requirements, especially if they work with clients from high‑risk sectors or jurisdictions.
FAU Check Czech Republic 2025: How to pass
Trend for 2024–2025: tightening FAU requirements for the quality of internal AML controls, the qualification of the contact person and regular updating of procedures to reflect changes in legislation and DORA (operational resilience for fintech).
COREDO uses a two‑stage approach in such projects:
- Preliminary AML audit “as by FAU”, but from the consultant’s perspective rather than the supervisory authority.
- Development and implementation of a regulatory remediation plan that addresses specific risks and findings.
Requirements for the AML contact person in the Czech Republic
The AML contact person is one of the key elements under review. The regulator assesses not only the formal appointment but also:
- the person’s experience in KYC/CDD, EDD for PEPs and high‑risk clients;
- understanding of the risk‑based approach and the ability to explain the company’s applied AML risk appetite;
- ability to interact with the FAU, timely file SAR/STR and correctly respond to FAU procedural requests.
- helps prepare the AML contact person for the FAU inspection in 2025 through targeted training (FAU cases, typical questions, analysis of incorrect answers);
- builds a cross‑functional AML committee so the AML officer is not left alone with risks, but can rely on lawyers, IT and risk management.
Preparation for an FAU audit: checklist and documents
When the FAU issues a request, time starts working against the company. Therefore we always set client expectations that preparation for an FAU audit is not a one‑off action but an ongoing process.
- an up‑to‑date AML policy with a clear description of the risk‑based approach, CDD/EDD procedures and scenario‑based transaction monitoring;
- an AML red flags matrix and scoring models for assessing clients and transactions;
- a full list of documents that the FAU typically requests: KYC files, monitoring logs, SAR/STR, minutes of AML committee meetings, internal audit reports;
- audit trail and data lineage for key decisions to block or allow transactions;
- a data retention policy reflecting AML data retention periods (for certain sectors, e.g. gambling operators: up to 10 years).
An important element: a pre‑prepared regulatory remediation plan template — if the FAU identifies violations, you immediately show a structured corrective action plan with deadlines, responsible parties and KPIs. From COREDO’s experience, this approach significantly softens the regulator’s response and reduces the risk of severe sanctions.
AML fines in the Czech Republic: how to minimize
AML fines and sanctions in the Czech Republic, a topic that for many clients becomes an “entry point”. In public EU and Czech cases fines reach millions of CZK, and for licensed players (payment institutions, investment companies, VASP) a real risk is suspension or revocation of the license.
Key consequences:
- administrative fines for non-compliance with AML in the Czech Republic;
- restriction of certain types of operations;
- requirement for large-scale remediation under FAU supervision;
- reputational damage affecting relationships with partner banks and counterparties.
Errors in FAU AML checks and account blocking
Often the first “sanction” is not fines but banks’ actions: account blocking, refusal to open a new account, tightening of internal limits.
COREDO regularly encounters such non-obvious but typical causes:
- mismatches between the declared business model and actual transactions (for example, declared trade in goods in the EU, while the account processes payments for marketing services from high-risk jurisdictions);
- frequent changes in the beneficiary structure without a clear explanation and documentary support;
- lack of clear logic in KYC profiles (clients with very different risk profiles are described uniformly).
Automation of AML in the Czech Republic: AI‑monitoring and ROI
For companies with international payments and especially for AML for fintech and crypto companies in the Czech Republic, automation of AML processes and AI monitoring have ceased to be an option ‘for growth’: they are a condition of survival and compliance with DORA.
Internal AML policies and a risk-based approach
A key element of successful automation is the content embedded in the AML policy. It should include:
- a formalized risk-based approach: segmentation of clients, jurisdictions and products by risk levels;
- scenario-based monitoring (scenario-based transaction monitoring) with clear trigger and prioritization rules;
- KPIs and ROI for AML projects: share of false positives, average SAR investigation time, number of transactions stopped before the incident stage.
Based on implementations carried out by the COREDO team, the typical KPI picture looks like this:
| KPI for automation ROI | Before the project | After AI monitoring implementation | Economic effect |
|---|---|---|---|
| Share of false positives | ~15% of alerts | ~3% | up to 80% reduction in SAR handling time |
| Average alert investigation time | 3–5 working days | 1 day | faster turnaround, fewer backlogs |
| Avoided fines and losses | 0 | up to 5 mln CZK (estimated) | ROI 200–300% over a 12–18 month horizon |
Cross-border compliance for Asia and Africa
For holdings that are based in the Czech Republic and expand into high-risk countries (parts of regions in Asia and Africa), the question is whether to centralize or distribute AML functions.
COREDO’s experience shows a working model:
- the strategic AML framework, risk appetite and key policies are formed centrally in the Czech Republic;
- operational KYC/CDD and monitoring of local clients are strengthened by local teams or reliable providers, while maintaining a single AML assurance standard and a unified reporting system.
Templates and Checklists for Business
In conclusion – the practical level at which COREDO usually begins projects to prepare for an AML audit in the Czech Republic.
What must be operational:
- Beneficiary identification (BO) procedures. Description of the methodology for Beneficial Ownership verification through EU/Czech registries, rules for regular data updates and checks on triggers (large transactions, structural changes, new high‑risk jurisdictions).
- Client files and data retention policy. Standards for customer lifecycle monitoring, from onboarding to offboarding, with a clear list of documents at each stage and retention periods (including up to 10 years for certain sectors). The data retention policy must be aligned with both AML and sectoral rules.
- Regulatory remediation plan template. A ready-made template for a corrective action plan for FAU findings: list of violations, risk assessment, specific actions, deadlines and responsible parties, control metrics (for example, reducing the share of unfilled KYC fields to <1%, increasing the share of EDD files for PEP to 100%).
- Outsourcing vs in‑house AML. For small companies and outsourced accounting firms, it makes sense to transfer some functions (sanctions monitoring, updates to regulatory requirements, vendor due diligence for AML technologies) to a professional provider, while keeping strategic decisions at the board level. Such a balance reduces operational risk and simplifies regulatory change management.
Key findings and steps for executives
If I distill my experience into three practical steps that most significantly reduce AML risks in the Czech Republic:
- Appoint a truly qualified AML officer and form a cross-functional AML committee. Ensure that the AML contact person complies with the 2025 requirements, understands the risk-based approach and can confidently communicate with the FAU.
- Implement or “fine-tune” AML monitoring automation with a focus on ROI. Use AI and scenario-based monitoring rules to reduce false positives, speed up investigations and strengthen case management for SAR/STR.
- Conduct a preliminary AML audit according to FAU standards and prepare a remediation plan. This will allow you to see in advance which AML breaches the FAU in the Czech Republic most often uncovers in your business, how to demonstrate proper beneficiary identification during an audit and which documents the regulator will request first.