Anti-Money Laundering Made Easier

AML (anti-money laundering) is a crucial and dynamic area of law that always deserves particular attention as the AML regulation imposes substantial obligations on entities such as banks, tax advisors, auditors, law firms etc. Namely, they are obliged properly identify clients and to check and report suspicious transactions.

The client’s first identification shall be performed with physical presence of the identified person. This may however constitute a serious problem, particularly in case of foreign clients. Travelling hundreds or thousands of kilometers only because of this may be a considerable obstacle for clients. The latest amendment to the AML Act effective as of 1 January 2021 reacts to this and introduces the possibility of client’s identification by electronic means as an alternative.

Client’s identification is always related to collection and processing of a broad scope of personal data. Personal data shall be strictly protected, especially if shared by electronic means. This is the reason why electronic identification is subject to strict security conditions. Only electronic identification performed under strict compliance with all legal conditions is regarded as valid.

There are two main forms of client’s electronic identification. As for the first one, electronic identification may be performed only if a mean of electronic identification (e.g. electronic ID card) (i) meets specific technical specifications and a high level of assurance arising from the relevant EU regulations and (ii) is issued and used within the qualified system according to the Act on Electronic Identification. As for the second form of electronic identification, it can be performed if a mean of electronic identification meets some specific criteria for electronic identification introduced by the latest amendment to the Act on Banks. Although the AML amendment may seem a little bit abstract and requires also knowledge of other laws, it will undoubtedly upgrade the AML regulation and will play an important role in case of distant identification. There are still some questions about electronic identification, however its practical application as of 1 January 2021 will definitely bring answers to them.

Mgr. Renáta Sedliačková