Fintech regulation in Poland 2024: significant changes for AML and VASP

The financial sector of Poland awaits a range of important amendments to be effected in 2024. Among them are new regulations for virtual asset service providers (VASP) and AML compliance. Read on to figure out the latest changes in the Polish regulatory framework for the financial market.

The new organizational structure of KNF 

Under the order of the Polish Prime Minister on November 23rd, 2023, the KNF introduced a new organizational structure. This restructure includes the establishment of the Department for Prevention of Money Laundering (AML) and the creation of two entirely new task forces:

• The Cryptoassets Market Supervision Team, and
• The Supervision Team for the Secondary Market of Non-Performing Loans.

The Cryptoassets Market Supervision Team is a response to KNF’s recent statement, which states that there are currently no legal measures in place to regulate the trading of crypto assets or protect investors in the virtual assets market. KNF also mentioned that it does not oversee the virtual assets market. However, this is expected to change once the MiCA regulation is implemented. KNF is preparing for the new regulation.

The Supervision Team for the Secondary Market of Non-Performing Loans is likely connected to the fact that as of January 1st, 2024, KNF will become the supervisory authority for the lending institutions market due to significant changes in the Consumer Loan Act. These changes will take effect on December 1st, 2023.

Instant credit transfers in euro to become the new normal

The Council and the European Parliament have agreed on a new regulation for immediate payments, expanding access to such payments in the EU and EEA. In March 2021 and April 2022, the Council emphasized the widespread use of instant payments and the goal of creating EU-wide competitive payment solutions. To achieve this, the Commission proposed a regulation on instant euro credit transfers on October 26, 2022. This regulation updates the 2012 Single Euro Payments Area (SEPA) Regulation by adding provisions for instant euro transfer orders.

The Regulation is expected to increase the use of instant euro transfers, giving easier access for EU consumers and businesses. Immediate euro payments will require widespread availability, including from existing payment service providers who must offer an immediate variant. Processing these payments will be streamlined by checking customer transactions against the EU sanctions list once a day. Providers will verify account numbers (IBANs) and payee names to detect possible errors or fraud before executing payments. Also, PSPs will ensure that the cost of instant euro payments is not higher than traditional non-euro transfers.

These new rules aim to increase the European economic and financial sector’s strategic autonomy by reducing reliance on third-country financial institutions and infrastructures. The resulting cash-flow opportunities will benefit individuals, and businesses, and foster innovation in value-added services.

Will PSD2-covered entities join the scheme?

The Legislature has decided to amend the Settlement Finality Directive, granting payment institutions and EMIs access to payment systems. As a result, these entities will be required to offer instant transfer services once the legislation is enacted.

In practice, the new rules mandate that instant payment providers verify that the IBAN matches the payee’s name. This is to ensure that any errors or fraud can be promptly communicated to the payer. This requirement will also extend to regular transfers.

Both the Council and Parliament have agreed that the new rules will come into effect after a shorter transition period in the euro area and a longer one in non-euro area countries. This allows more time for adjustment. Additionally, a review clause has been included, which mandates the Commission to submit a report analyzing changes to fees.

KNF’s notice on crowdfunding 

In November, the Polish Financial Supervisory Authority (“FSA”) issued a notification regarding the utilization of crowdfunding platforms for economic activities. The FSA emphasizes that the transitional period, during which crowdfunding platforms could operate without a license, ended on November 10. Presently, investment crowdfunding or loan crowdfunding by entities headquartered in Poland is only permissible with a permit from the FSA.

Entities that operate crowdfunding platforms without a registered office in Poland can operate in the country if they obtain a permit from the supervisory authority in their home country and notify the FSA of their intention to operate cross-border in Poland. These platforms are supervised by the foreign authority that permitted them, not the FSA. Engaging in crowdfunding activities without a permit, or conducting activities similar to crowdfunding services but not as a crowdfunding service provider, is considered an offense and can result in a fine of up to PLN 5,000,000.

EBA Consultation on New Guidelines for Preventing Abuse of Funds and Certain Crypto Assets Transfers 

The European Banking Authority (EBA) is currently carrying out a consultation process for the development of new Guidelines. These Guidelines are designed to prevent the misuse of funds and certain crypto asset transfers for money laundering and terrorism financing. The primary objective of these Guidelines is to implement the “Travel Rule” set by FATF for both digital market participants and European regulators. The “Travel Rule Guidelines” provide instructions on when and how the travel rule should be applied, particularly for transactions involving wallets hosted by CASPs. It’s important to note that these rules do not cover direct transactions between unhosted wallets. However, if funds are transferred from an unhosted wallet to a CASP-hosted wallet and the amount exceeds 1,000 euros, the travel rule applies.

Entities to whom the Guidelines are addressed are:

• Payment Service Providers, 
• Intermediary PSPs, 
• Crypto-Asset Service Providers,
• Intermediary CASPs,
• Competent authorities responsible for supervising PSPs, IPSPs, CASPs and ICASPs for compliance with their obligations under Regulation (EU) 2023/1113).

On November 24th, 2023, EBA started a public consultation on the Guidelines mentioned above. During this stage, stakeholders, including financial institutions, can provide comments on the document by completing a questionnaire available on EBA’s website. The consultation period offers an opportunity for stakeholders to contribute their insights and perspectives on the proposed Guidelines. Additionally, a virtual public hearing will be held on January 17, 2024, as part of the consultation process. The consultations will conclude on February 26, 2024. Following the consultations, EBA will make amendments to the Guidelines that will play a crucial role in shaping the European market for crypto-assets.

EBA consultation on RTS setting criteria for determining the composition of supervisory colleges 

EBA has initiated a consultation process on regulatory technical standards (RTS). These standards aim to establish criteria for determining the composition of supervisory colleges for issuers of significant asset-based tokens (ARTs) or significant e-money tokens (EMTs). This process is under Regulation (EU) 2023/1114 of the European Parliament and Council, which addresses markets in crypto-assets and amends Regulations (EU) No 1093/2010 and (EU) No 1095/2010, as well as Directives 2013/36/EU and (EU) 2019/1937. This regulation is commonly referred to as “MiCAR”.

The draft Regulatory Technical Standards (RTS) pertain to the principles governing the operations of supervisory colleges. These colleges play a crucial role in facilitating the EBA’s supervisory tasks under the Markets in Crypto-Assets Regulation (MiCA), as well as promoting cooperation and information exchange among its members. The ongoing consultation, along with other documents released on November 8, 2023, holds significant importance as part of the third wave of regulatory documents concerning MiCAR.

In these draft Regulatory Technical Standards (RTS) proposals, the following are outlined: 

• the criteria for determining the ‘most relevant’ custodians of asset reserves, trading platforms, PSPs offering payment services for significant Electronic Money Transfers (EMTs), and cryptoasset service providers offering custody and administration of cryptoassets on behalf of clients; and 
• the conditions for considering Automated Regulatory Tools (ARTs) and EMTs to be used on a large scale in a Member State, which affects the composition of the supervisory college under the MiCAR.

A public consultation on these RTS was initiated on November 8, 2023. Comments on the document can be submitted through the website of the EBA. Additionally, a virtual public hearing on the consultation will take place on January 17, 2024. The consultation period will conclude on February 8, 2024.