Act on Anti Money Laundering (“AML”) – Information for clients on Attorney’s obligations

The attorney is obliged to inform his / her client on the obligations prior to the providing of legal services in form of monitored activities under the AML.

  • The monitored activities are, e.g.:
    • custody of money,
    • custody of securities or other assets,
    • if the client requests the attorney to act in his / her name and on his / her behalf relating to: purchasing or selling real estate or business; money, securities, shares or other assets managing; establishing, managing or operating business company; provision of direct debit, payments, transfers, deposits or withdrawals.

The recorded information about the client, his / her business and other activities should be relevant to the business or service.

CLIENT IDENTIFICATION

The lawyer is obliged to identify the client if the value of his / her transaction exceeds EUR 1000 or always in the case of a suspicious transaction, establishing a business relationship, concluding a custody contract, purchasing or receiving cultural heritage objects or objects of cultural value, second-hand goods or goods without proof of their acquisition and mediation of sale or pledging of things.

  • Identification shall be carried out on a natural person or natural person acting on behalf of a legal entity. The client must be present at the first identification. In the case of a natural person, identification is carried out from a valid identity card stating: the type and number of the card, the country that issued it and the validity period + verification of the image match. The lawyer is obliged to record these data.
  • If the client is a legal entity, attorney records the identification data and verifies them the from the legal entity’s existence document and identifies the natural person acting on behalf of the legal entity to the extent and in the manner specified above for the natural person. The identification is based on a valid Commercial or Trade Register record. The record must not be older than 3 months. The identification shall be carried out in the physical presence of the acting person, who shall be identified to the extent and in the manner equal to that of the natural person.
  • If there is a client’s proxy, his / her identification is carried out in the same way as stated above and by submitting the written power.
  • If there is client’s legal representative, the identification is carried out in the manner described above (natural person), while the legal representative submits to the attorney the identification data of the client.
  • As part of the client’s identification, the attorney will find out and record whether the client is or is not a politically exposed person or whether he /she is a person against whom the Czech Republic applies international sanctions under the Act on Implementation of International Sanctions.
  • In case of a continuing business relationship or other deals with the same client, the attorney only checks the validity and completeness of the identification data.

The mediated identification can be carried out by a notary or a public administration contact point (Czech POINT) at the request of the client or attorney. The attorney must then receive the original of the verification of identity, not the electronic or hard copy.

CLIENT CONTROL

Client control is continuous process inteding to prevent client from unwitting unlawful activity that involves the active cooperation of the client, which consists mainly in the providing of relevant documents or statements on specific transactions. If the client refuses, the lawyer may not take over the case. If doubts about possible irregularity persist after the scrutiny, the attorney is obliged to notify the suspicious transaction.

  • Control is always carried out in case of:
    • client’s one-off transaction of value higher than EUR 15,000,
    • trade with a politically exposed person,
    • trade with an entity from ranked countries, especially rated hight-risk by the FATF,
    • suspicious transaction,
    • conclusion of a contract on the custody of money,
    • cash transaction from EUR 10,000.
  • Control is not carried out in case of:
    • providing legal advice,
    • defending client in criminal proceedings,
    • representing client in court proceedings.

Client control includes

  • obtaining information on the purpose and intended nature of the trade or business relationship;
  • identifying the ownership and management structure of the client and its beneficial owner if the client is a legal person, trust or other legal arrangement without legal personality, and taking measures to identify and verify the identity of the beneficial owner;
  • ongoing monitoring of the business relationship, including the review of transactions carried out during the relationship in order to determine whether the transactions are in accordance with what is known to the attorney about the client and its business and risk profile;
  • reviewing background of funds or other assets to which the trade or business relationship relates;
  • in the context of a business relationship with a politically exposed person, appropriate measures to establish the background of his / her property.

Attorney refuses to execute the transaction or to take over the case or terminates the client relationship if the obligation to identification is due and the client refuses to submit identification, to prove the power of attorney under Section 8 (4) of the AML Act or shall otherwise not cooperate to the control.

Data shall be processed for a period of 10 years after the termination of the relationship with the client or after the transaction. (The period starts on the first day of the calendar year following the year in which the last known transaction was performed.)

  • Identification data:
    • copies of documents submitted for identification (if any),
    • information on who and when performed the first identification of the client,
    • information and copies of documents obtained as part of the client’s control, documents justifying an exception to client identification and control,
    • in the case of representation, the original or a true copy of the power of attorney or the number of the court’s decision on the appointment of a guardian, and the data and documents on the transactions connected with the identification obligation.

Attorney shall comply with the obligation to notify within 5 calendar days from the date on which the suspicious transaction was detected to the Czech Bar Association. An attorney is obliged to report under Section 18 of the AML only within the monitoring activity, and only if a suspicious transaction within the meaning of Section 6 of the AML is discovered while conducting monitoring activity.