Slovakia

Last Updated: 12/11/2008

CENTRAL AUTHORITY FOR REPORTING

Financial Intelligence Unit based at Police forces of Slovak Republic (Financná spravodajská jednotka)

Address: Racianska 45, 832 23 Bratislava, Slovenská Republika,
Tel.: (+421) 9610 514 02
Fax: (+421) 9610 590 47 E-mail: sjfpsek@minv.sk)

ANTI-MONEY LAUNDERING REGULATOR(S)

Financial Intelligence Unit based at Police forces (Financná spravodajská jednota);
National Bank of Slovakia and Ministry of Finance Slovak Republic in some circumstances in cooperation with FIU. National Bank of Slovakia and Ministry of Finance are obliged to inform the FIU about desired control of mandatory persons. FIU together with NBS or MFSR may upon their agreement conduct a joint control over mandatory persons. There are over 30 mandatory persons where lawyers are included as well.

HAS THE THIRD EU MONEY LAUNDERING DIRECTIVE BEEN IMPLEMENTED? IF NOT, WHEN IS IT EXPECTED TO BE IMPLEMENTED?

The EU Third Directive was implemented in Slovakia by the Act No. 297/2008 Coll. on the prevention of money laundering and terrorist financing and on changes and amendments of some other acts (herein after known as the “Act”) (Zákon c. 297/2008 Z. z. o ochrane pred legalizáciou príjmov z trestnej cinnosti a o ochrane pred financovaním terorizmu a o zmene a doplnení niektorých zákonov). The Act was passed by the National Council of Slovak Republic on 2 July 2008. It entered into force on 1 September 2008. The Slovak version of the Act is available here.

The Act also implemented the Second Anti-Money Laundering Directive (2006/70/EC) of 1st August 2006 of the European Parliament and also laid down measures implementing the First Anti-Money Laundering Directive (2005/60/EC) of the European Council as regards the definition of “politically exposed person” and the technical criteria for simplified customer due diligence procedures and exemption on the grounds of financial activity conducted on an occasional or very limited basis.

The subject matter of the Act adjusts the rights and obligations of legal and natural persons on the prevention and detection of the use of the financial system for the purpose of money laundering and terrorist financing. The Act is composed of 38 sections and comprises inter alia fundamental provisions e.g. definition of money laundering, terrorist financing, mandatory person, furthermore comprises conditions of providing customers due diligence (simplified and enhanced), action while ascertaining of suspicious business transaction – large or unusual transactions, status and tasks of the Financial Intelligence Unit – under the administration of Police forces, Penalties in the form of offences and administrative misdemeanors.

The Act shall help to disclose money laundering and terrorist financing more efficiently by virtue of police (FIU) power fostering. Moreover the Act creates closer co-operation of financial and credit institutions, lawyers, public notaries and all other mandatory persons with FIU.

Unfortunately, the links to the mentioned legislation are only available in Slovak. You can find these versions at 2 particular websites: www.justice.gov.sk (go to the section headed “japsi”) and www.iura.sk (go to the section headed “predpisy”). www.justice.gov.sk also provides full text and consolidated versions of all Slovak legislation. Please note: access to particular sections of Slovak legislation through www.irua.sk requires users to have an account and password.

LIST THE LAWS REGARDING ANTI-MONEY LAUNDERING, INDICATING WHICH LAWS ARE APPLICABLE TO LAWYERS.

Act No. 297/2008 Coll. on the prevention of money laundering and terrorist financing and on changes and amendments of some other acts (Zákon c. 297/2008 Z. z. o ochrane pred legalizáciou príjmov z trestnej cinnosti a o ochrane pred financovaním terorizmu a o zmene a doplnení niektorých zákonov);
Act No. 586/2003 Coll. on advocacy as amended (the Advocacy Act)*.

In the Advocacy Act there are no other requirements except of Attorney-client privilege. According to these measures Lawyers have to keep all information safe and remain silent on all client’s issues in so far as the AML legislation determines otherwise. But the confidentiality must be provided when ascertaining of the legal position of the client, criminal proceeding, judicial proceeding, etc. – see the part of confidentiality of this resource.

As a result of the Advocacy Act, lawyers are under an obligation to report suspicious transactions , when providing of legal service to client while buying or selling of real property or business entities, etc. Moreover lawyers must determine the extent of customers due diligence. The Attorney-Client privilege is not explicitly determined but it is the opinion of the contributor that it is not broken when lawyers reports the client’s suspicious transaction to the FIU.

The question arises what in case of reporting the client’s suspicious transaction by lawyer and subsequently the client is got knowledge of the fact that his lawyer reported the suspicious transaction to the FIU. In practise this situation is not impossible. Therefore I would very welcome the Guidance issued by the SBA.

ARE VISITING LAWYERS SUBJECT TO LOCAL LAWS REGARDING ANTI-MONEY LAUNDERING, AND, IF SO, TO WHAT EXTENT?

All lawyers pursuing advocacy (local lawyers, visiting or international lawyers) are under the obligation of fulfillment of AML in the same extent regardless of their status.

LIST ANY MONEY LAUNDERING GUIDANCE FOR LAWYERS (FOR EXAMPLE, LAW SOCIETY OR BAR ASSOCIATION GUIDELINES) CURRENTLY IN PLACE.

Slovak Bar Association has not issued any guidance for lawyers concerning AML rules yet.

IS THE LAW SOCIETY/BAR ASSOCIATION INVOLVED IN SUPERVISING OR ENFORCING COMPLIANCE WITH ANTI-MONEY LAUNDERING REGULATIONS?

Yes, Slovak Bar Association (SBA) under the Act No. 586/2003 Coll. on advocacy as amended in the case of infringement of the advocacy act or internal rules, the SBA may issue a summary punishment for lawyers. It concerns the observance of AML law as well.

DESCRIBE CLIENT DUE DILIGENCE REQUIREMENTS, INCLUDING WHEN IT MUST BE UNDERTAKEN BY LAWYERS.

Section 10 of the Act imposes for lawyers customer due diligence which comprises:

Identifying of client and verifying his/her identity;
Identifying of beneficial owner and taking adequate measures to identify him/her including all measures to understand the ownership and managing structure of the client who is a legal entity or legal arrangement;
Obtaining information on the purpose and intended nature of the business relationship;
Conducting ongoing monitoring of the business relationship including scrutiny of transactions undertaken throughout the course of the relationship to ensure that the transactions being conducted are consistent with the mandatory person’s knowledge of the customer, the business and risk profile, including, where necessary, the source of funds and ensuring that the documents, data or information held are kept up-to-date.

According to section 10 subpara. 2 of the Act lawyers are obliged to do customer due diligence:

When establishing a business relationship;
When carrying out occasional transactions amounting to EUR 15.000 or more, whether the transaction is carried out in a single operation or in several operations which appear to be linked;
When there is a suspicion of money laundering or terrorist financing, regardless of any derogation, exemption or threshold;
When there are doubts about the veracity or adequacy of previously obtained customer identification data;
When there is a balance payout of deliverer abolished deposit account – anonymous passbooks.

Moreover, lawyers must identify clients and verify their identity when carrying out transaction amounting to EUR 2.000 or more by way of derogation the abovementioned subparagraph 2.

Furthermore, a lawyer is obliged to develop guidelines and instructions on customer identification, reporting, filing registrations, internal control, risk assessment, risk management, management control and communication, in addition to educational programs for employees to prevent money laundering and terrorist financing.

Under the term “identification” section 7 shall comprise:

When physical person identifying of name, surname, personal number., valid address, state residency, class and No. of personal document, (iA) when physical person – entrepreneur business address, identification No. name and No. of official registry where the entrepreneur is listed if so;
When legal entity name, business address, identification No, name and number of official registry where the legal entity is listed, identification of a person who is empowered to act on behalf of legal entity;
When person who is empowered with full power identification of (i) or (ii) and identification of person empowered for representation of this physical person or legal entity;
When infant without personal document identification of name, surname, personal No. or date of birth, residency, state residency of infant and his/her representative;
When fulfillment by third party taking over statements and information from credit institution or financial institution.

Lawyers according to the Act section 5 subpara. 1j) are mandatory persons performing customer due diligence while providing legal service to customers when:

Buying and selling of real property or business entities;
Managing or depositing of clients money, securities or other assets;
Opening or management of bank or branch office of foreign bank savings or securities accounts;
Creation operation or management of companies, associations of physical persons or legal entities, trusts or other similar legal entities.

DOES YOUR COUNTRY FOLLOW A RISK-BASED APPROACH TO CLIENT DUE DILIGENCE BY LAWYERS?

Yes, lawyers are under an obligation of determining the extent of due diligence. This is dependent on an evaluation of the risk of money laundering and of the financing of terrorism.
Risk of money laundering and financing of terrorism shall be judged by lawyers upon the customer’s type of business, business relationships and transactions.

Lawyers must to prove while are under control of FIU that appropriate due diligence has been conducted in regard to the customer and in appropriate extent. (Section. 10 subpara. 4 of the Act).

ARE THERE ENHANCED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, POLITICALLY EXPOSED PERSONS?

Enhanced due diligence is required whenever money laundering or terrorist financing seems more likely than usual. The Act shall comprise situations where:

The customer has not yet been physically present for identification purposes;
There are cross-border correspondent banking relationships with institutions outside the EU or EEA;
When the transaction or business relationship involves a politically exposed person.

For the purposes of the Act term “politically exposed person” has been implemented in the same way as it is expressed in the Second Anti-Money Laundering Directive (2006/70/EC) of 1st August 2006. The Act also laid down implementing measures for the First Anti-Money Laundering Directive (2005/60/EC) regarding the definition of “politically exposed person” and the technical criteria for simplified customer due diligence procedures. It also provided for the exemption on the grounds of financial activity conducted on an occasional or very limited basis and means as natural person, who is entrusted with prominent public function and while his/her administration or one years afterwards has not a permanent residency in Slovak Republic.

With regards to abovementioned Directive the Act comprises following prominent public functions:

Head of State, head of government, ministers and deputy or assistant ministers or function similar to ministers;
Member of parliament;
Member of supreme court, of constitutional court or of other high level judicial body whose decision are not subject to further appeal, except in exceptional circumstances;
Member of court of auditors or of the board of central bank;
Ambassador, charges daffaires;
High ranking officer in the armed forces;
Member of the administrative, management or supervisory body of state owned enterprise or other enterprise included to the State property;
Member in the appropriate function in the EU body or international organization.

All conditions are expressed in the section 6 of the Act.

ARE THERE SIMPLIFIED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, LISTED COMPANIES?

Yes, Section 11 of the Act determines simplified customer due diligence. Customer due diligence is not required:

When customer is a credit institution or financial institution pursuing business in EU or EEA;
When customer is credit institution or financial institution pursuing business in third country provided that they are subject to requirements to combat money laundering or terrorist financing consistent with the Act and a reasonable supervision over such institution is being conducted consistent with Community legislation;
When customer is legal entity (company) whose securities are admitted to trading on a regulated EU market or company pursuing business in third country provided that they are subject to requirements to combat money laundering or terrorist financing consistent with the Act and are under the obligation on publishing information in the same contents as required by the law;
When in the extent of identifying and verifying of beneficial owner (konecný užívatel výhod) while pooled accounts are held by a public notary or an advocate from Member state or from third country provided that they are subject to requirements to combat money laundering or terrorist financing consistent with the Act and the information on the identity of the beneficial owner is available for mandatory person, on request to the depository institution;
When Slovak public authorities or foreign public authorities in certain circumstances (e.g. imposing by public function according to EEC Treaty and EU Treaty and EEC secondary legislation, transparent administration, etc.).

Furthermore simplified customer due diligence are acceptable in the case of life insurance policies up to EUR 1.000 (annual premium), or up to EUR 2.500 (single premium), insurance policies for pension schemes, electronic money in compliance with the taking up, pursuit of and prudential supervision of the business of electronic money Institutions Directive 2000/46/EC.

The Directive 2000/46/EC was implemented into Slovak legislation (Act No. 510/2002 Coll. on system of payments as amended), while if the medium electronic device cannot be recharged the maximum amount stored in the device is no more than EUR 150, or where the medium electronic device can be recharged, a limit of EUR 2.500 is imposed on transactions in a calendar year, except when an amount of EUR 1.000 or more is redeemed in that same calendar year, or transaction represents a low risk of money laundering and terrorist financing (e.g. existence of written contract on providing of certain kind of business, etc).

ARE LAWYERS PERMITTED TO RELY ON THIRD PARTY DUE DILIGENCE? IF YES, PLEASE DESCRIBE.

Performance by third parties is determined in the section 13 of the Act. According to this section credit institutions and financial institutions which have conducted customer due diligence shall submit information accompanied by all relevant documents.

There is only a restriction on business relations of all mandatory persons, including lawyers. The restriction is that it will not be considered to be a performance by a third party where any person who acts on the behalf of a lawyer when conducting due diligence checks, is performing in any way other than as an employee. In est de jure lawyers may rely on third party customer due diligence. Even the lawyers may rely on third party due diligence, they shall conduct their own customer due diligence in compliance with the Act.

WHEN IS A LAWYER UNDER AN OBLIGATION TO REPORT SUSPICIOUS TRANSACTIONS?

Lawyers are under an obligation to report suspicious transactions when providing of legal service to client while:

Buying and selling of real property or business entities;
Managing or depositing of money, securities, or other assets;
Opening or managing bank accounts, or securities accounts;
Establishing or managing of undertakings, trusts or other similar legal entities.

DOES ATTORNEY/CLIENT PRIVILEGE AND/OR DUTIES OF CONFIDENTIALITY PROVIDE A DEFENCE OR PARTIAL/TOTAL EXCEPTION TO THE REQUIREMENT TO REPORT SUSPICIOUS TRANSACTIONS?

The attorney-client privilege is determined in the section 23 of the Advocacy Act. Attorney-Client privilege is not-applicable when a lawyer is providing information on a suspicious transaction.

In compliance with section 22 of the Act, lawyers shall not be obliged to providing information to FIU with regard to they receive from client or otherwise:

When ascertaining the legal position;
When defending client in criminal proceeding;
When representing client in judicial proceeding;
When providing legal advice on proceedings related with (2) or (3) including legal advice on instituting and avoiding of proceedings in (ii) or (iii) regardless of information obtained by lawyers before, during or after such proceedings.

DOES LOCAL LAW PROVIDE ANY CRIMINAL AND/OR CIVIL INDEMNITY TO A LAWYER WHO HAS REPORTED A SUSPICIOUS TRANSACTION?

Lawyers who have reported clients upon suspicious transaction enjoy indemnity. No questions regarding breach of client confidence may result from reports subject to the MLA.

ONCE A SUSPICIOUS TRANSACTION REPORT HAS BEEN FILED, IS A LAWYER ALLOWED TO PROCEED WITH THE LEGAL ADVICE/TRANSACTION, AND, IF SO, MUST CONSENT FROM AUTHORITIES BE OBTAINED FIRST?

The Act does not require lawyers to refrain from providing legal advice when a suspicious transaction has been filed. Lawyers are under an obligation of refraining suspicious transaction until it has been reported to FIU. Furthermore lawyers must not act in suspicious transactions when there is a danger of frustration or a duly intensity of restraining of income probably used for money laundering or terrorist financing, or upon the written request of FIU. Moreover determined are time-limits for transaction refraining and action given by FIU or informing the FIU immediately afterwards of transaction non-refraining.

IS THERE A TIPPING-OFF PROHIBITION? IF YES, PLEASE DESCRIBE.

There is no special provisions regarding tipping-off prohibition. Basically lawyers (as well as all mandatory persons) are under an obligation of notifying the FIU. Exception falls on lawyers the attorney-client privilege, confidentiality in compliance with Act on advocacy, public notaries, auditors, external accountants and tax advisors in compliance with particular legislation.

DESCRIBE ANY RESTRICTIONS ON ACCEPTING A NEW CLIENT.

If a customer refuses undergo the identification and verification procedure of himself / herself; or consent to the submission of information regarding the purpose and character of transaction; or to the provision of information on whose behalf shall act; lawyers must refuse to act, abort the business relationship with customer, or refuse to carry out the concrete transaction or business (Section 15 of the Act).

ARE THERE ONGOING MONITORING REQUIREMENTS FOR EXISTING CLIENTS? IF YES, PLEASE DESCRIBE.

The customer lawyer relationship must be monitored on an on-going basis. All documentation and all other information upon customers shall be updated on an on-going basis, so as transactions shall be reviewed during the relationship if transactions are in compliance with knowledge upon customer due diligence profile.

DESCRIBE ANY OTHER WAYS IN WHICH LAWYERS ARE AFFECTED BY ANTI-MONEY LAUNDERING LEGISLATION.

No information available.

HAVE LAWYERS IN YOUR JURISDICTION BEEN IMPLICATED IN MONEY LAUNDERING, INCLUDING ANY TYPE OF COMPLAINT, ARREST OR PROSECUTION?

According to Interior Ministry of Slovak Republic website till 31.08.2008 one lawyer was prosecuted by FIU. No further information is available. The lawyer was not prosecuted, he was audited by FIU. The outcome has not been published yet.

HAS THE FINANCIAL ACTION TASK FORCE (FATF) CONDUCTED A MUTUAL EVALUATION OF THIS COUNTRY, AND, IF SO, WHAT WERE THE FINDINGS CONCERNING LAWYERS’ COMPLIANCE WITH THE FATF 40+9 RECOMMENDATIONS?

Yes. FATF had evaluated the situation. It is expressed in the report accompanied the then draft bill on the Act (www.nrsr.sk).

Information provided by:

Zoltán Sárkány
Associate at Law firm JUDr. Marcel Habrman
Tajovského 12
740 61 Nové Zámky,
Slovak Republic