The abbreviation AML/CFT literally means “Anti-Money Laundering/Combating the Financing of Terrorism”. This term is used in the context of systematic fighting against the legalization of crime proceeds (the so-called “dirty money”), prevention of terrorism financing and the distribution of weapons of mass destruction.
Another abbreviation directly related to combating money laundering is KYC (“Know Your Customer“). It should be understood as the obligation to identify the counterparty before performing any financial transaction. This is one of the most important principles aimed at implementing AML/CFT measures.
The information in this article applies only to the activities of companies registered and operating in the Czech Republic. At the same time, 90% of the information applies to other EU jurisdictions.
All persons obliged to comply with the mentioned principles are listed in Act No. 253/2008 Coll., on Certain Measures against the Legalization of the Proceeds from Crime and the Financing of Terrorism.
This list includes loan and financial institutions, gambling operators, companies providing services related to virtual assets, companies providing services in the field of real estate and financial accounting, a person authorised to trade in used goods, or to broker such trading, as well as other companies working with the money of legal entities and individuals.
Obligations of companies under AML/CFT
When providing professional services for AML/CFT purposes, the organizations mentioned above are obliged to:
- develop and implement a system of internal policies, procedures and control measures;
- develop a risk assessment system;
- identify and verify customers based on a pre-developed KYC form;
- keep records of all measures aimed at reducing the risks of money laundering and terrorist financing, as well as those taken to identify and control customers;
- report suspicious activity of counterparties to regulatory authorities;
- appoint a contact person and an authorized person;
- conduct regular staff training on the rules of compliance with AML/CFT obligations.
Proper compliance with these obligations is monitored by the Financial Analytical Office (FAÚ), as well as the Czech National Bank (ČNB) – the latter monitors the activities of financial and credit institutions. Failure to comply with AML/CFT obligations entails substantial penalties.
Banks or trading companies may also request confirmation of the company’s compliance with all AML/CFT measures. In case of the absence of the necessary documentation or non-fulfillment of obligations, financial institutions have the right to refuse to cooperate with such an organization.
If you are unsure whether your company is included in the list of organizations required by law to comply with the principles of AML/CFT, don’t hesitate to contact COREDO specialists for advice.