On the Prevention of Money Laundering and Terrorism Financing – 2

Internal Control

Section 6. Obligation to Create an Internal Control System

(۱) The subject of the Law – a legal person – shall create and document, according to the type of activity thereof and by developing the relevant policies and procedures, an internal control system for the prevention of money laundering and terrorism financing.

(۲) An internal control system is a set of measures comprising activities directed towards the provision of compliance with the requirements of the Law, providing for the relevant resources and carrying out training of the employees, in order that the participation of the subject of the Law in money laundering or terrorism financing is prevented as much as possible.

(۳) When creating an internal control system a credit institution, insurance company and investment brokerage company shall observe the requirements of the Credit Institutions Law, Financial Instrument Market Law, Law on Insurance Companies and the Supervision Thereof and the regulatory enactments issued pursuant to these laws.

(۴) The requirements referred to in Paragraphs one, two and three of this Section shall not be applied to the subjects of the Law specified in Section 3, Paragraph one, Clause 9 of this Law regardless of the legal status of such subjects.

Section 7. Internal Control System

(۱) When creating an internal control system, the subject of the Law shall provide at least for the following:

۱) the procedure for the identification of customers;

۲) the procedure for the assessment of money laundering and terrorism financing risk related to the customer, the state of residence (registration) thereof, the economic or personal activity of the customer, the services used and transactions performed;

۳) the procedure for and the amount of customer due diligence, taking as a basis the assessment of money laundering and terrorism financing risk performed by the subject of the Law and observing the minimum requirements for customer due diligence prescribed in this Law and other regulatory enactments;

۴) the procedure for carrying out monitoring of the customer’s transactions, taking as a basis the assessment of money laundering and terrorism financing risk performed by the subject of the Law;

۵) the procedure for discovering unusual and suspicious transactions, and the procedure according to which the subject of the Law shall refrain from executing a suspicious transaction;

۶) the procedure for reporting unusual and suspicious transactions to the Control Service;

۷) the procedure for the storage of data and documents obtained in the process of the identification of a customer and customer due diligence, as well as during the conduct of monitoring of the customer’s transactions; and

۸) the rights, duties and liability of the employees in observing the requirements of this Law.

(۲) The Finance and Capital Market Commission shall determine the methodology for the prevention of money laundering and terrorism financing for credit institutions and financial institutions, except for capital companies carrying out foreign currency cash buying and selling.

(۳) Credit institutions and financial institutions, except for capital companies carrying out foreign currency cash buying and selling, shall, in addition to that specified in Paragraph one of this Section, provide for the duty of an employee responsible for the prevention of money laundering and terrorism financing to inform the board on a regular basis regarding the operation of the internal control system for the prevention of money laundering and terrorism financing at the relevant credit institution or financial institution.

Section 8. Improvement of the Internal Control System

The subject of the Law shall assess the effectiveness of the internal control system operation on a regular basis, observing additional risks which may arise as the result of introduction and development of new technology, and, if necessary, shall conduct measures for the improvement of the internal control system effectiveness.

Section 9. Training of Employees

The subject of the Law shall ensure that responsible employees are aware of the risks related to money laundering and terrorism financing, regulatory enactments regulating the prevention of money laundering and terrorism financing, as well as shall conduct regular training of employees, in order to master their ability to discover unusual transaction indications and suspicious transactions and to carry out the activities intended in the internal control system.

Section 10. Appointment of an Employee Responsible for Compliance with the Requirements of the Law

(۱) The subject of the Law – a legal person – shall designate a structural unit or appoint one or more employees who are entitled to take decisions and who shall be directly responsible for the observance of the requirements of this Law. The subject of the Law shall notify the Control Service, as well as the relevant supervisory and control authority, of the designation of such a structural unit or the appointment of such an employee within the time period of 30 days following the granting of the status of the subject of the Law.

(۲) Credit institutions and financial institutions, except for capital companies carrying out foreign currency cash buying and selling, shall, in addition to that specified in Paragraph one of this Section, appoint a member of the board who shall be responsible for the prevention of money laundering and terrorism financing at the relevant credit institution or financial institution.

(۳) The subject of the Law – a legal person –, the supervisory and control authority thereof, the Control Service and its officials and employees are not entitled to disclose to a third party the data that are at their disposal regarding the persons specified in Paragraph one of this Section or employees of the structural units.

(۴) A person, who is responsible for the observance of the requirements of this Law at a credit institution or insurance merchant carrying out life insurance, may not be convicted of committing an intentional criminal offence