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We hope for mutual understanding, helpfulness and trust in the implementation of the requirements imposed on the Bank by the Acts and the CNB Decree, laying down the framework for mutual successful negotiations.
In the provision of its services, the Bank applies the rules of internal principles, procedures and control measures when combating money laundering and terrorist financing, which result from legislation:
Furthermore, the Bank must comply with its obligations in the context of applying international sanctions.
International sanctions are a set of restrictive measures used by the international community (UN, EU) as a tool to maintain or restore international peace and security, to protect fundamental human rights and to fight terrorism. In this respect, the Bank is obliged to comply with restrictions or prohibitions on the provision of any benefits to entities subject to international sanctions, the conclusion of transactions with them, including foreign-currency transactions, transfers of funds, etc. In these cases, the Bank has the right to refuse to enter into a contractual relationship or to terminate the contractual relationship unilaterally.
These measures aim to prevent and detect money laundering and financing of terrorism. We have selected for you some of the obligations imposed on us by law and with regard to which our banker may contact you in relation to identification or regular due diligence.
The obligation to identify the client is based on the Section 7 of the Act No. 253/2008 Coll. Every client who enters into a contractual relationship with the Bank has this obligation to regularly check the validity and completeness of the data.
Requirements according to the types of entities:
With a few exceptions defined by legislation, identification must take place in the physical presence of the client, with the natural person presenting an identity card and the legal entity proof of its existence during identification. The Bank is entitled to make copies of the documents submitted during identification. A copy of the identity card is made by the Bank only with the consent of its holder; in the event of the holder’s disagreement, the Bank shall overwrite the data in the Identification Card / cash receipt.
The Bank is obliged to check client data in accordance with the Section 9 of the Act No. 253/2008 Coll. in order to collect the data necessary to assess the possible risk of money laundering.
Depending on the type of entity, the Bank is obliged to perform due diligence of the client to the following extent and the intended transaction. The due diligence includes information on:
According to the valid legislation, the Bank is entitled, at any time during the contractual relationship with the client, to request that the client presents the documents or information required by the Bank, especially proof of origin of funds credited to the client's account, source of wealth of the client, evidence of creditworthiness and obligations of the client or the client’s credibility.
According to the Section 15 of the Act No. 253/2008 Coll., a bank has the right to refuse execution of a transaction and establishment of a new business relationship and to terminate a business relationship in the following cases:
Definition of beneficial owner is based on the Sections 2, 3, 4 and 5 of the Act No. 37/2021 Coll. :
Section 2)
Section 3)
Section 4)
Section 5)
Pursuant to the Act No. 37/2021 Coll., the bank is further obligated to check the data in the Register of Beneficial Owners (hereinafter referred to as the “RBO”) against another verified source (e.g. the Commercial Register / similar document identifying the beneficial owner).
In the event that a discrepancy between the RBO and the Commercial Register (or similar document) is discovered, the client is obligated to provide to the Bank, without undue delay, an explanation in writing, e.g. by forwarding the request for amendment to the relevant registration court.
In the event that a discrepancy between the RBO and the available document(s) is discovered, the consequences may lead to the following:
Within the so-called enhanced customer due diligence laid down in the Section 9a of the Act No. 253/2008 Coll., the Section 9a(3)(f) provides that the obliged entity “shall implement other measures taking into account the nature of the obliged entity, its activities and its own risk assessment.”
In accordance with this provision, the Bank identifies several other features for a proper risk assessment as part of the enhanced due diligence that the Bank also applies to its corporate clients. One of them is the breakdown of the ownership structure exceeding the limit of 10% and the data on the place of birth of persons appearing in the client's ownership structure.
As regards legal entities, the Bank also collects information about the client's ownership structure – its intermediate shareholders, including % shares.
An intermediate shareholder means a legal entity that owns or controls more than 25% of the ownership structure between the client and its beneficial owner.
For these legal entities, the Bank is obliged to collect the following data:
Besides the aforementioned, the Bank keeps records of the statutory representative (natural person) in the scope of the following data: name, surname, date of birth, place of birth, country of birth, sex and citizenship as regards first shareholders.
A politically exposed person means:
a) means a natural person who is or who has been entrusted with prominent public functions of national or regional importance, such as in particular head of state, prime minister, head of a central state administration body and his deputy (deputy, state secretary), member of parliament, member of the governing body of a political party, head of territorial self-government, judge of the supreme court, constitutional court or other supreme judicial body against whose decision no remedies can be applied in general, with some exceptions, a member of the central bank's bank board, a senior officer of the armed forces or corps, a member or deputy member, if it is a legal entity, of a statutory body of a state-controlled business corporation, an ambassador or head of a diplomatic mission, or a natural person who is or who has been entrusted with a similar function in another state, in an institution of the European Union or in an international organisation;
b) a natural person who is:
The Bank is entitled to collect information from clients about the origin of assets and funds.
the Section 7 of the Act No. 253/2008 Coll. (1) The obliged entity shall identify the client at the latest when it is clear that the value of the transaction exceeds the amount of EUR 1,000, unless otherwise provided by this Act.
(2) Notwithstanding the limit set out in par. 1, the obliged entity shall also always identify the client in the event of:
a) suspicious transaction,
b) establishment of a business relationship,
c) purchase or acceptance of cultural monuments, objects of cultural value, second-hand goods or goods without proof of its acquisition to mediate their sale or acceptance of assets as collateral, or
d) payment of the balance of the cancelled deposit from the savings book to bearer.
(3) The obliged entity shall identify a person who is not a policyholder and is entitled to life insurance benefits, at the latest at the time of payment of the insurance benefits.
(4) The obliged entity for individual types of transactions provided to this entity, not covered by par. 2, shall determine, based on the risk assessment under Section 21a, the value of the transaction upon the achievement of which it shall always identify the client. This value may not exceed the amount referred to in par. 1.
(the Section 9 (ad 2) of the Act No. 253/2008 Coll. (2) Customer due diligence entails
a) obtaining and evaluating information on the purpose and intended nature of the transaction or business relationship and information on the nature of the client's business,
b) identifying the beneficial owner and taking measures to verify his identity from credible sources; provided the client is subject to the obligation to register in the beneficial owners or similar register, the obliged entity shall check the beneficial owner at least from this register or similar register and one other sources; and determining whether the beneficial owner is not a politically exposed person or a person against whom the Czech Republic applies international sanctions pursuant to the Act on the Implementation of International Sanctions,
c) in the event that the client is a legal entity or a trust fund, determining the ownership and management structure of the client, and determining whether the person in this structure is not a person against whom the Czech Republic applies international sanctions pursuant to the Act on the Implementation of International Sanctions,
d) continuous monitoring of the business relationship, including reviewing the transactions carried out during the relationship in order to determine whether the transactions are in accordance with what the obliged entity is aware of the client and his business and risk profile,
e) reviewing the sources of funds or other assets covered by the transaction or business relationship, and
f) as part of a business relationship with a politically exposed person, also taking reasonable steps to determine the origin of its assets.
the Section 15 of the Act No. 253/2008 Coll.
(1) The obliged entity refuses a transaction or the establishment of a business relationship or, unless this is precluded by a special legal regulation, terminates the business relationship if a customer due diligence obligation is imposed, and
a) the client
b) the customer due diligence cannot be performed for another reason, or
c) the person performing the customer due diligence has doubts as to the correctness of the information presented by the client or the authenticity of the submitted documents.
(2) The obliged entity refuses a transaction with a politically exposed person, even as part of a business relationship, should the origin of funds or other assets used in the transaction be unknown to the obliged entity.
New law 37/2021 Coll. About Evidence of Beneficial owners
For the purposes of this Act, the following shall mean
a) a foreign trust fund means a trust fund or a facility similar to a structure or functions governed by the law of another state,
b) legal arrangement means a trust fund or a foreign trust fund,
c) a final beneficiary means a person who may have, directly or indirectly through another person or legal arrangement, a substantial part of the total benefit generated during the activity or winding up of the legal entity or generated in the administration or dissolution of the legal arrangement (hereinafter referred to as the “benefit”) and does not pass on that benefit,
d) a person with ultimate influence means a person who may, without instructions from another, directly or indirectly exercise a decisive influence in a legal entity or in the administration of a legal arrangement,
e) the beneficial owner means any natural person who is a final beneficiary or a person with ultimate influence,
f) the relationship structure means the relationships through which the final beneficiary may indirectly obtain benefit or through which the person with ultimate influence may indirectly exercise his influence, including the ownership and management structure,
g) chaining means the possibility of indirectly obtaining benefit or the possibility of indirectly exercising ultimate influence through successively related persons or legal arrangements or successively related relationships,
h) branching means the possibility of obtaining benefit or the possibility of exercising ultimate influence through more individual chainings,
i) a person in top management means any natural person who provides day-to-day or regular management of the performance of the activities of a legal entity, such as business management, and is also
j) the person performing the registration means a legal entity who has a beneficial owner, or a trustee or a person in a similar position in a foreign trust (hereinafter referred to as the “trustee”) of a legal arrangement,
k) valid data means the data on the beneficial owner in the register of beneficial owners, which have not been deleted without replacement or with replacement with new data,
l) registration means
m) automatic transcription means a transcription of data or their deletion without replacement or with replacement with new data, kept in the public register pursuant to the law governing public registers of legal entities and natural persons and trust fund register (hereinafter referred to as the “public register”), in the trust fund register pursuant to the same the law (hereinafter referred to as the "trust fund register") or in the basic register, in the register of beneficial owners without management through the interconnection of public administration information systems,
n) irregularity means a situation in which valid data or data which have been deleted from the register of beneficial owners without replacement or with replacement with new data do not or did not correspond to the actual situation, or a situation in which no data are entered in the register of beneficial owners.
(1) The final beneficiary of a legal entity is any person who can directly or indirectly obtain more than 25% of the total benefit generated during the activity or winding up of the legal entity and does not pass on this benefit; it is considered that the benefit is not passed on.
(2) The final beneficiary of a business corporation is any person who directly or indirectly has the right to a share in profit, other own funds or liquidation balance of the business corporation (hereinafter referred to as the “share in the benefit”) greater than 25% and does not pass on this share in the benefit; it is considered that the share in the benefit is not passed on.
(3) For the purposes of calculating the amount of the indirect share in the benefit, as regards
(1) A person with ultimate influence in a business corporation is any natural person who is a controlling person in accordance with the legislation governing the legal relations of business corporations.
(2) A person with ultimate influence in a non-business corporation and in a housing or social cooperative is considered to be any natural person who is a member of their statutory body.
(3) The fact that a natural person is a person with ultimate influence in a corporation is indicated by the person’s direct or indirect share in the voting rights, which significantly exceeds the shares in the voting rights of other persons, especially if it is higher than 25%.
(4) For the purposes of calculating the amount of the indirect share in the voting rights, as regards
a) chaining, the shares of the voting rights held by the related parties or the legal arrangement shall be multiplied; with the exception of the share in the voting rights in a corporation which is the subject of the calculation,
b) branching, products of the shares in the voting rights of the individual chainings shall be added together.
the Section 9a of the Act No. 253/2008 Coll.
(3) In the event of enhanced customer due diligence, the obliged entity shall, to the extent required for an effective management of the identified risk, beyond the scope of measures applied in customer due diligence
f) implement other measures taking into account the nature of the obliged entity, his activities and his own risk assessment.
The Act No. 253/2008 Coll. of 5 June 2008, on Selected Measures against the Legitimisation of the Proceeds of Crime, and Methodological Instruction No. 3 (Identification of the Beneficial Owner by Obligated Entities) on the means of determining ownership and management structure, see: NATIONAL LEGAL AGENDA | FINANCIAL ANALYTICLE OFFICE, MINISTRY OF FINANCE OF THE CZECH REPUBLIC (financnianalytickyurad.cz).
In connection with the process of client due diligence in accordance with the provisions of Section 9 (2) (c) of the AML Act, the Bank has a legal obligation to determine the ownership and management structure in the case of a client that is a legal entity or trust fund (i.e. also in the case of a similar legal arrangement without legal personality). The aim is to ascertain the transparency of these structures in the case of the client, i.e. to determine how it is managed, to where its funds flow and which natural person manages it or, as the case may be, receives funds from it, and subsequently to verify whether such structure does not include a person against whom the Czech Republic has applied international sanctions (Section 8 [8] of the AML Act). This legal obligation must be fulfilled prior to the establishment of a business relationship with the client or prior to the first transaction within the business relationship, and the Bank shall update the ascertained information in the course of the business relationship at intervals corresponding to the client’s risk level. The client is obligated to actively communicate to the Bank any changes of beneficial owners and changes in the structure of owners and controlling entities.
The management structure is represented by the members of the statutory bodies of the individual legal entities involved in the ownership structure. In relation to the fulfilment of the obligations pursuant to the AML Act, it continues to apply that in ordinary situations (i.e. in the case of standard client due diligence), it is sufficient, on the basis of Section 9 (3) of the AML Act, to ascertain information on the management structure only up to the so-called second level. Thus, if this involves a client that is a legal entity, it suffices to ascertain information on all members of the client’s statutory bodies (if these are legal entities, then also their statutory bodies) and the statutory bodies of the legal entity immediately above it in the ownership structure. Therefore, this involves information on the members of the client’s statutory body (which the Bank often obtains in the course of client due diligence, as such information comprises identification data pursuant to Section 5 (1) (b) (2) of the AML Act – e.g. name, surname, residential address, date of birth and nationality) and the legal entities immediately above it in the ownership structure, including statutory bodies (identification data pursuant to Section 5 [1] [b] [3] of the AML Act).
the Section 9a of the Act No. 253/2008 Coll.
(3) In the event of enhanced customer due diligence, the obliged entity shall, to the extent required for an effective management of the identified risk, beyond the scope of measures applied in customer due diligence,
a) obtain additional documents or information about
3. the source of funds and other assets of the client and the beneficial owner,
Section 9 “Customer Due Diligence”, clause 2:
(2) Customer due diligence entails
e) reviewing the sources of funds or other assets covered by the transaction or business relationship
- Detail overview about transactions on accounts and cards
- Signing payments with fingerprint or Face ID
- Payments via QR code, bar code or payment slip scan
- Standing orders management
- Mobile Phone top up with few clicks
- Credit card repayment
- Debit card activation
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