Why banks request information from us seemingly unrelated to the services provided. Do we gotta keep them informed of the origin of our money? And why do they want to know how much cash we're going to use?
Daria just got married. As a gift she received a large injection of cash, according to the Polish custom, hidden in envelopes. In order not to keep her at home, she decided to put a large condition of that money into her account. The fastest and free of charge can be done by deposit. But here: surprise. The device screen shows the question of the origin of the means. You gotta choose 1 of the options. “Why does the bank request specified information?” Daria wonders.
Jacek decided to set up a bank account. He chose 1 that, against the background of others, has rather a good offer of interest rates. Yes, it's only a fewer percent today, but it's always better than the lousy 1.5 points on most savings accounts. At the facility, a pleasant atmosphere is spoiled by a polite consultant with unusual questions about the origin of income and... plans to trade cash. Jacek shudders and counters the question of why the bank would want specified information. His money, his case, whether he'll pay with credit card, blitz or cash. In response, a somewhat confused expedient expeditiously spells out a fewer safety phrases and a bill. due to the fact that specified information is not necessarily needed by banks, but by the state that introduced specified government alternatively than another legislation.
What is it, exactly? And what are the intentions of the legislators behind these provisions?
Bank, you have to!
With this information, however, it is simply a bit like a hot potato: banks recognise that it is simply a bill, the government side does not deny the legal act, but the decision which information to collect leaves to the banks. They, as institutions required to study on financial crimes, aggregate the data they consider essential to pass on the records to the State. The full focus is on the Anti-Terrorism and Money Laundering Act, implementing a directive of the European Parliament and the Council of the European Union into the Polish legal system. It is she who obliges banks to alert the Ministry of Finance, specifically the General Financial Information Inspector in the rank of Deputy Minister, on illegal financial transactions. Of course, it is about money laundering or financing illegal activity.
– Such action is most appropriate – assesses in consequence to our questions Deputy Minister of Finance and General Inspector of Financial Information Mikołaj Skuza. According to the Deputy Minister, on the basis of the Anti-Terrorism and Money Laundering Act, banks can collect data on transactions carried out by the client as well as erstwhile they cooperate with the client, i.e. erstwhile concluding a contract. That's erstwhile a fewer delicate questions may arise.
It is complicated that this approach involves a change in the policy of global institutions and states to examine financial flows. At present, the main burden of hazard assessment and information on suspected illegal activities lies with banks or another institutions designated in the law, alternatively than with state investigative bodies. This creates problems, due to the fact that these institutions must act to avoid penalties for inadequate safeguards.
– Financial institutions are so placed in a wedge due to the fact that they operate a large number of financial transactions on the 1 hand and do not want to monitor client flows excessively, and on the another hand they have obligations to prevent money laundering and must adopt an appropriate, inactive unspecified, standard of countering criminal transactions, fearing that the audit institutions will accuse them of not applying appropriate measures – Robert Czarnowicz from the Ordo Iuris Institute tells us.
This means that banks can choose the instrument by which they examine the legality of financial flows. These procedures may surprise us. In 1 bank, the deposit will require us to declare the origin of the paid money, and in another – no. In 1 bank, they're going to ask us about the cash turnover, and where else, there's no specified thing. interior rules dominate, which are not full transparent.
However, there is 1 crucial question: do these procedures not impose besides tight corsets on the consumer? Yes, it is only about obtaining information, but we are not certain for what intent it will be utilized in the future. So are these actions actually adequate to the scale of the threat?
From cannon to mosquito?
Because that's what makes the most of the controversy. Of course – safety can be justified many, but the results of the investigation of the legality of transactions may surprise. The GIIF report, which is required to print annually, shows that 3859 suspicious transactions (so-called Suspicious Activity Reports) were reported in 2021. On a yearly basis, it is actually a drop in the sea of all transactions that are estimated to be 1-2 billion. However, the Inspector General of Financial Information explains that this number should be interpreted in an appropriate manner.
– It refers not to individual transactions of suspects, but to descriptive notifications of activities and transactions of suspects, alleged SARs. These notifications contain a description of several, several, and in any cases respective 100 transactions – linked through the parties to the transaction, the circumstances of the transaction, the close implementation period and/or the engagement of the same assets – and the circumstances associated with them which, in the belief of the reporting institution or entities, may be related to money laundering or terrorist financing – explains Deputy Minister Mikołaj Skuza.
However, even if we accept the very optimistic version for the Ministry of Finance, that in each SAR reported there are on average 1 100 individual transactions, we do not scope half a percent of all transactions carried out during the year in Poland. But simply classifying a transaction into SAR does not mean a crime. Only any of them go to the D.A.'s office, and there's another sieve.
In addition to SARs, banks besides inform the head of GIIF of alleged over-the-counter transactions, i.e. those in which at least EUR 15 000 were operated, whose 36 million were reported in 2021, according to the GIIF report. This number may besides include the sum of transactions between certain entities, so more transfers or electronic payments could be included in 1 cross-border transaction.
The number of over-prognosis operations reported and qualified as SARs gives us any awareness of the scale, but inactive incomplete. After all, we can assume, as Robert Czarnowicz pointed out in his conversation with us, that the banks are afraid about the allegations of errors in transaction tracking procedures, which in turn means that they may be over-normatively reliable in their assessment of which transaction is considered suspicious. It is so worth noting another paragraph in the study presented by GIIF, the effects of the analytical action taken by the typical of the finance department. In 2021, GIIF launched 2447 analytical proceedings, of which he transferred to the D.A.'s Office 519 notifications of crime and 315 notifications connected with the prosecution's money laundering proceedings. It was besides decided to block 1426 bills.
It's not, to put it mildly, besides awesome a number. But possibly it's not just the quantity, it's besides the quality...
Something for something.
To put it more simply: it is possible that GIIF has actually managed to paralyze the flow of money into criminal activity on a advanced scale, especially since we are talking not only about legalising profits from criminal activity but besides about financing terrorism.
The Inspector General of Financial Information has no uncertainty that it is worth collecting and analysing these data. – It cannot be considered that banks or another obliged institutions apply inadequate funds to their customers by asking them about the sources of money they have or intend to have. This is information that allows the institution to apply financial safety measures and identify circumstances that may indicate suspected money laundering or terrorist financing. – Minister Mikołaj Skuza convinces.
Robert Czarnowicz, in turn, notes that in practice applied by states and global institutions, where the burden of assessing the legality of transactions is transferred to banks, it is hard to apply any more subtle criteria than obtaining information in this declaration from each customer. – It is impossible to draw up specified criteria, which will let to analyse only transactions which have a circumstantial origin indicating with a advanced probability the suspicion of money laundering – claims a lawyer from Ordo Iuris.
In the opinion of Czarnocz, there is simply a dilemma present in many areas of our lives, in which digital technology enters – in return for convenience we decide to quit part of our privacy. – However, account must besides be taken of the reasons behind the application of these regulations. These interference measures must be proportionate to the intended nonsubjective of preventing money laundering and financing terrorism. It's truly hard to tell if they are. – adds.
Dangerous cash
It is, however, justified to ask whether specified procedures besides supply opportunities for abuse, specified as a extremist regulation of our privacy in another areas. 1 specified delicate issue is the anticipation of free circulation of cash. For any time now, the government has been making clear that specified payments are not welcome. The proof of this is the limits that the Act enters into force on 1 January 2024 will impose on us. In a fewer months, cash will be possible up to the amount of PLN 8,000 for entrepreneurs and PLN 20 1000 in the relation between the entrepreneur and the consumer. Above these amounts, you will request to pay by bank transfer or payment card.
If, what we mentioned at the beginning of the text, 1 of the banks asks a possible client about the amount of cash he plans to rotate, explaining the anti-terrorist financing and money laundering bill, is it possible that GIIF sees in cash a crucial safety risk?
– The cash nature of the transaction is an crucial hazard origin for money laundering. This is indicated in the 2019 National Assessment of the hazard of Money Laundering and Terrorist Financing. However, the intention to carry out cash transactions is not in itself a suspicious circumstance, especially if it is reflected in legitimate business activity – explains Deputy Minister Mikołaj Skuza.
And 1 more thing: is it reasonable for banks to collect information on how much we intend to usage cash? Minister Skuza: – Questions from institutions required to find whether the client intends to carry out cash transactions, on what scale and whether these transactions arise from the client's activities, let for an adequate assessment of the hazard of money laundering and terrorist financing and the application of financial safety measures in terms of that risk.
So we will not escape the dilemma of the border between safety and freedom, especially since in fresh years it is increasingly possible to get the impression that the erstwhile is starting to be a kind of dominant in national legislation. Yet individual freedom and privacy are not dreams or inventions of insubordinate citizens. safety is surely important, but in his name you cannot take from us step by step the right to privacy. It is peculiarly appreciated in the culture of the widely understood West. As the sociologist and essayist Shoshan Zuboff carefully notes, there is simply a deep rooting request to escape to a sanctuary, an absolute space of privacy and intimacy, without interference from anyone from outside.
As if this does not sound high-pitched, trading in cash for us is specified a "return exit", a safety in case of emergencies. The perception of him solely by the prism of a safety threat can be seen as an effort to radically restrict this law.
In a way, Robert Czarnowicz of Ordo Iuris notes this, which, in his opinion, is not an effective tool in the fight against money laundering.
Therefore, should we not be afraid about the expanding force on the state to collect information on the means of electronic payment and on cash trading? The problem is not that individual will gather information, but what they will do about it and to whom they will give it. Perhaps, as Zuboff mentioned above wrote well, we are sitting in a car in which we do not yet see train horses. However, they are there, and the car is undoubtedly consistently heading in the direction previously chosen.
Krzysztof Gędłek
We asked Mbank and Santander Bank about the question of the appropriateness of obtaining any information from customers. Despite the fewer days we gave to both parties, we received no feedback from them.
Non-cash society: are we threatened with “financial slavery and political tyranny”?
