Centralized Records of Bank Accounts – Effective Protection and Stringent Oversight?

27. 2. 2017 | Source: BusinessInfo.cz

motiv článku - Centralized Records of Bank Accounts – Effective Protection and Stringent Oversight?

On 6 October 2016, Act No. 300/2016 Coll., on a Central Bank Accounts Registry, came into force, as a piece of legislation which had been recommended by the European Commission in connection with measures aimed at fighting terrorism. Based on the model of other EU member states such as France, Italy, or Germany, this act introduces yet another control mechanism which seeks to facilitate the exposure of criminal activities, including corruption, and the prosecution of the perpetrators.

Based on the Central Bank Accounts Registry Act, a Central Bank Accounts Registry was created which is to comprise all bank accounts of (both domestic and foreign) private individuals or legal entities. The Central Registry allows law enforcement, tax authorities, the intelligence service, and other authorized petitioners to obtain information on the existence of all bank accounts of a given suspect within 24 hours, based on a single request, thus doing away with the need for blanket enquiries with dozens of institutions that used to take days if not weeks. This brings down the overall time needed for the collection of relevant evidence, and thus helps the state take timely action and prevent the outflow of ill-gotten gains from the bank accounts of perpetrators.

The authority in charge of the Central Registry is the Czech National Bank (ČNB), and "credit institutions" (i.e., according to the definition in the Central Bank Accounts Registry Act, all banks, branches of foreign banks, mutual savings and credit unions) must provide the ČNB on a daily basis with updates on the accounts of all their clients, both natural persons and legal entities. Under the Central Bank Accounts Registry Act, credit institutions must also report accounts which they keep for entities that lack legal personhood of their own, such as trust funds. The information thus reported must primarily allow for identification of the account owner. It does not include, on the other hand, information about account movements or balances. The information will be stored in the Central Registry for a period of 10 years from the date on which the given account was cancelled.

The ČNB is tasked with overseeing banks' compliance with the law, and with publishing on its website an annual report about the utilization of the Central Registry. Credit institutions who fail to observe their reporting duty face stiff sanctions under the Central Bank Accounts Registry Act: failure to submit the required data may trigger a fine of up to CZK 10 million.

The ČNB will formally announce the incorporation of bank account data in the Central Registry on its official bulletin board. The Central Registry itself is expected to go fully operational in mid-2018. Only time will tell whether this control mechanism will actually be effective and deliver the intended benefits.

Source: bnt journal, Anna Suchá, advokátka, bnt attorneys-at-law s.r.o.

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