In Poland, control measures are being tightened under the Act on Counteracting Money Laundering and Terrorist Financing (AML), adopted in accordance with European Union requirements (Dz. U. 2018 poz. 723).
Under these regulations, financial institutions are obliged to verify the legality of the origin of funds entering accounts and any transactions involving them; if suspicions arise, accounts may be frozen and then the tax authorities and the public prosecutor’s office will be notified.
We are frequently approached by clients who have faced the consequences of such checks. Problems most often arise when depositing funds into accounts in cash and when exchanging cryptocurrency. Very often, in transactions on cryptocurrency exchanges, deals are effectively concluded between individuals, and at the final stage, the funds, already in fiat currency, are transferred to the account from an unknown third party. If the amounts are sufficiently large (the limits vary from bank to bank) or transactions are carried out repeatedly, security algorithms are triggered and the account is blocked ‘pending clarification of the circumstances’. If, during the process of communicating with the bank, the customer is unable to provide documentary evidence of the origin of the funds, the information is forwarded to the General Inspector of Financial Information (GIIF); the case may also be referred to the public prosecutor’s office.
Furthermore, it is important to bear in mind that the Polish tax authorities are required to monitor all property transactions (for a period of five tax years following the purchase) and the purchase of certain high-value goods (such as cars), whilst the Ministry of the Interior verifies the source of funds when issuing permits for the purchase of land by foreign nationals.
In all these cases, there is only one solution: to prepare and keep documents in advance that confirm both the origin and the ‘route’ of the funds coming into Poland. It is important to remember that in tax and financial law, unlike in criminal law, there is no presumption of innocence: on the contrary, it is the taxpayer who bears the responsibility to document all their income or other sources of funds (gifts, loans, etc.).
Therefore, the option of ‘carrying up to €10,000 across the border without declaring it’ or depositing cash into an account turns out to be the least safe method in practice. This is precisely the situation faced by a Belarusian citizen whose bank blocked 1 million zlotys intended for the purchase of a flat in Poland (link below the article).
WARNING! Do not fall into a tax trap: even if your money was obtained legally, but you cannot provide documentary evidence of this, the Polish tax authorities may classify it as ‘income from unknown sources’. This will result in a penalty tax rate of 75% of the total amount.
Consequently, even funds obtained entirely legally, such as gifts from relatives or profits from exchanging cryptocurrencies for traditional currencies (fiat), are at risk of being audited if they have not been correctly declared and documented. Even if this amount is legally exempt from tax, a failure to declare it in a timely manner and provide accurate documentation may result in it being classified as income from an unknown source. It is therefore crucial to ensure you have a complete history of the capital’s origin before carrying out any banking transaction.
AML regulations lead to increased transparency of bank account transactions, and as a result, the number of related enquiries and checks is set to rise significantly in the near future.
We recommend that our clients familiarise themselves in advance with all aspects and implications of cross-border transactions and the purchase of property in Poland, particularly in the context of documenting the origin of funds. To book a personal consultation, simply fill in the form on the website: https://najdienowa.com/en/service-order-en/
Description of the situation involving a Belarusian citizen – click here to read (in Russian)