Poland is not on the FATF List of Countries that have been identified as having strategic AML deficiencies
Compliance with FATF Recommendations
The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Poland was undertaken by the Financial Action Task Force (FATF) in 2013. According to that Evaluation, Poland was deemed Compliant for 6 and Largely Compliant for 24 of the FATF 40 + 9 Recommendations. It was Partially Compliant or Non-Compliant for 5 of the 6 Core Recommendations.
MoneyVal Plenary - 1st June 2017: Fourth round follow-up: application by Poland to be removed from the follow-up
Following the 52nd Plenary in December 2016, MONEYVAL had invited Poland to provide another report for consideration at the 53rd Plenary (30 May – 1 June 2017), and urged the country to make progress until this Plenary on addressing the outstanding deficiencies. In line with MONEYVAL’s revised Rules of Procedure, the Plenary recalled that Poland is expected at that occasion to seek removal from the 4th round of mutual evaluation.
The 53rd Plenary agreed that, since the adoption of the 4th round MER in 2013, Poland had made clear progress in addressing many of the deficiencies identified in the previous evaluation, notably in respect of R.1, R.3, R.35, SR.I and SR.II. Nevertheless, the draft AML/CFT Law which is expected to address the outstanding deficiencies in relation to preventive measures (R.5, R.13 and SR.IV), as well as the deficiencies in relation to
targeted financial sanctions (SR.III), is yet to be adopted by the Parliament which is envisaged for June 2017.
Given the progress made by Poland under SR.II and other key and core recommendations, and taking into account the fact that the AML/CFT draft law is expected to be adopted very shortly, the Plenary agreed to grant Poland some extra time for finalising the adoption of the AML/CFT law and to decide on its application to be removed from the regular follow-up process at the next Plenary in September 2017. Should the draft AML/CFT not yet be in force by the time of the next Plenary in September, the Plenary will - in accordance with Rule 13, paragraph 6 of its Rules of Procedure - consider the application of Compliance Enhancing Procedures (CEPs).
US Department of State Money Laundering assessment (INCSR)
Poland was deemed a Jurisdiction of Concern by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR). Key Findings from the report are as follows: -
Poland is a high-income economy according to World Bank definitions and the eighth largest economy in the European Union. Poland lies directly along one of the main routes used by narcotics traffickers and organized crime groups between the former Soviet Union republics and Western Europe. However, Poland is not considered a regional financial center, nor is it considered a particularly important international destination for money laundering.
According to the Government of Poland, evasion of customs duties and taxes by organized Polish criminal elements and others remains the largest source of illegal funds. Authorities identified virtual currencies, specifically bitcoin, as an increasingly significant avenue for money laundering. Authorities continue to report that Asian (primarily Chinese and Vietnamese) organized criminal elements are increasingly remitting profits from tax evasion and the sale of counterfeit goods via money transfers and couriers. The majority of Asian organized crime activity occurs at the Chinese Trade Center located in Wolka Kosowska, approximately 25 kilometers from Warsaw. There are also smaller Asian shopping centers located in Rzgow (near Lodz) and Jaworzno (near Katowice) where organized crime activity is suspected. The principal scheme involves the extreme undervaluing of imported goods through the falsification of invoices, which are used to determine the customs value of products and the applicable value added tax (VAT). The authorities also suspect the sale of counterfeit goods and illegal drug trafficking at these markets.
Local companies and organized crime groups use fuel and cigarette smuggling to avoid excise taxes and as a major source of laundered proceeds. The practice is particularly significant along the Kaliningrad border. Money laundering through trade in scrap metal and recyclable material continues to be a growing trend, as is organized criminal activity in the financial services area through internet banking, credit cards, and electronic systems for money transfers. The Finance Ministry maintains the effectiveness of actions against money laundering involving transfer of money to tax havens is improving due to the increase in cooperation agreements concluded with counterparts in such countries, including Russia. Authorities believe some money laundered in Poland originates in Russia or other countries of the former Soviet Union. The nation’s banks, insurance companies, brokerage houses, and casinos are also major venues of money laundering.
Poland is an increasingly important international center for business email compromise (BEC) money laundering scams, in which sophisticated cybercriminals target businesses working with foreign suppliers or those who regularly perform wire transfer payments. In these scams, cybercriminals compromise legitimate business email accounts through social engineering or computer intrusion techniques to conduct unauthorized fund transfers. The criminals then launder the money through Polish banks before transferring the funds to their final destinations.
There are no international sanctions currently in force against this country.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index 58
World Governance Indicator – Control of Corruption 75
Corruption is a problem for businesses operating in Poland, although its levels have decreased in recent years. Political corruption constitutes a challenge to fair business as politicians use their positions to gain benefits, and practices of nepotism and cronyism are widespread. Poland's Criminal Code offences include active and passive bribery, bribery of foreign officials, extortion and money laundering. However, the government does not prosecute these offences effectively, and officials engage in corruption with impunity. Sectors most prone to corruption are public services and public procurement. Despite facilitation payments and gifts being criminalised, these practices are widespread. For further information - GAN Integrity Business Anti-Corruption Portal
Poland has pursued a policy of economic liberalization since 1990 and Poland's economy was the only EU country to avoid a recession through the 2008-09 economic downturn. Although EU membership and access to EU structural funds have provided a major boost to the economy since 2004, GDP per capita remains significantly below the EU average and the unemployment rate is now below the EU average.
The government of Prime Minister Donald TUSK steered the Polish economy through the economic downturn by skilfully managing public finances and adopting controversial pension and tax reforms to further shore up public finances. While the Polish economy has performed well over the past five years, growth slowed in 2013 and picked back up in 2014-15. Poland’s new centre-right Law and Justice government plans to introduce expansionary economic policies to spur long-term growth, but social spending programs are expected to lead to increased deficit spending over the medium term.
Poland faces several challenges, which include addressing some of the remaining deficiencies in its road and rail infrastructure, business environment, rigid labour code, commercial court system, government red tape, and burdensome tax system, especially for entrepreneurs. Additional long-term challenges include diversifying Poland’s energy mix and sources of supply, strengthening investments in innovation, research, and development, and as well as stemming the outflow of educated young Poles to other EU member states, especially in light of a coming demographic contraction due to emigration, persistently low fertility rates, and the aging of the Solidarity-era baby boom generation.
Agriculture - products:
potatoes, fruits, vegetables, wheat; poultry, eggs, pork, dairy
machine building, iron and steel, coal mining, chemicals, shipbuilding, food processing, glass, beverages, textiles
Exports - commodities:
machinery and transport equipment 37.8%, intermediate manufactured goods 23.7%, miscellaneous manufactured goods 17.1%, food and live animals 7.6% (2012 est.)
Exports - partners:
Germany 27.1%, UK 6.8%, Czech Republic 6.6%, France 5.5%, Italy 4.8%, Netherlands 4.4% (2015)
Imports - commodities:
machinery and transport equipment 38%, intermediate manufactured goods 21%, chemicals 15%, minerals, fuels, lubricants, and related materials 9% (2011 est.)
Imports - partners:
Germany 27.6%, China 7.5%, Russia 7.2%, Netherlands 5.9%, Italy 5.2%, France 4.1% (2015)
Investment Climate - US State Department
In the twenty-six years since Poland discarded communism and the twelve years since it joined the European Union (EU), Poland's investment climate has improved steadily and is highly conducive to U.S. investment. Since 2007, Poland's economy has grown over 32 percent compared with the EU’s average growth of 4.1 percent. In 2015, Poland was one of the EU leaders in consumption and investment growth. Poland’s strong prospects for future growth, driven by domestic demand, will likely continue to attract new investors seeking access to its dynamic market of over 38 million people, and to the broader EU market of nearly 500 million.
Foreign investors also cite Poland’s well-educated and relatively low-cost work force as a major reason to invest, as well as its proximity to major markets. The volume of U.S. investment in Poland amounts to around USD 30 billion, taking into account the amounts routed through U.S. subsidiaries in other countries. That makes U.S. firms one of the largest groups of foreign investors in Poland. Poland has worked to establish a solid legal foundation and tax regime conducive to investment. The government continues to focus on streamlining regulation and bureaucratic processes to make doing business easier.
The government seeks to expand the economy by supporting productivity and foreign trade, encouraging and supporting entrepreneurship, scientific research, technological development, and innovation through the use of domestic and EU funding. For instance, there are plans to increase tax breaks for entrepreneurs, and decrease the corporate income tax rate on small and medium enterprises.
There are opportunities for foreign direct investment (FDI) in a number of Polish sectors. Business process outsourcing of accounting, legal, and information technology services, as well as research and development, are Poland's fastest-growing sectors, and will continue to attract FDI. Defense is another promising sector, as Poland will spend between USD 35-45 billion through 2022 on military modernization. The government seeks to promote domestic production and technology transfer opportunities in awarding military tenders. There are also investment opportunities in the energy sector (nuclear, renewables and natural gas) as Poland seeks to diversify its energy mix. Information technology and infrastructure is another promising area, as Poland implements its plan to connect all Polish households to the internet by 2020. Moreover, the new government plans to revitalize the shipbuilding sector.
While the overall economic outlook is positive, policy decisions enacted and proposed after the October 2015 general election may affect business confidence in the future. Legal, regulatory, and environmental uncertainty, particularly in the energy, retail and banking sectors are areas of concern for investors. Rating agencies have lowered their ratings or outlooks due to increased government spending and the possibility of eclipsing the EU’s budget deficit limits in 2017 or beyond. Laws to restrict farm land and forest purchases came into force April 30, 2016, significantly restricting direct and indirect trade in agricultural properties. It is too early to predict how strictly the government will enforce and interpret these laws and their impact on foreign investors. Foreign investors are increasingly skeptical of interactions with state owned or affiliated energy and financial sector enterprises, due to proposed changes in state-owned governance structures, authorizing policies and legislation.
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