The question posed in the title may seem surprising. Only four years ago another AML directive was published, marking the next stage of development of EU rules on money laundering and financing of terrorism (known as the 4th AML Directive or AMLD4). Its predecessor, AMLD3, was adopted 10 years before that. And just over a year ago significant changes in EU law were adopted, known as AMLD5, and the member states still have time to implement the latest changes into their national legal systems, with a deadline in January 2020.
At the end of September 2019, Rahim Blak published the response issued to him by the Office of the Polish Financial Supervision Authority (UKNF) to questions concerning the possible application of financial regulations to his planned and realised activity involving raising capital through distribution on the market of personal tokens. Although the response was issued in a specific case submitted to the Innovation Hub, given the lack of a public general position of KNF on the legal status of tokens, the document is also relevant to the broader market.
For over five years, including within this blog, we have written about the changes in application of anti money laundering and counter terrorist financing (AML/CFT) regulations to activity involving crypto assets. But further legal changes and notable new interpretations continue to arise.
As I wrote nearly a year ago, at the request of the G20 countries the issue of crypto assets was taken up recently by several key global organisations involved in establishing standards in specific fields. One of them is the Financial Action Task Force (FATF), an international organisation appointed to develop and assist in implementing and monitoring standards for combating money laundering, financing of terrorism, and financing of the proliferation of weapons of mass destruction.
Last year I proposed that Poland should take a broader approach to the issue of regulatory sandboxes, not merely copying solutions adopted in other countries. Now we see the first steps towards creation of multi-sectoral (not exclusively financial) regulatory sandboxes.
The trend started by the Financial Conduct Authority in the UK of creating regulatory sandboxes for the financial sector has spread around the world, including Poland. Although many voices from major jurisdictions, such as the United States and Germany, are skeptical, this solution undoubtedly has its advantages. Market participants usually rate this concept very highly, even if in reality the sandbox does not deliver immediate regulatory benefits (for example, it does not enable limited operation of regulated activity without a licence, which would be difficult in EU member states due to the harmonised regulatory regime).
Financial technology (FinTech) has been one of the hottest technology areas for several years. It has attracted much attention in Poland as well, particularly due to the successes to date of local FinTech start-ups.
This topic picked up additional steam when a financial innovation working group was appointed at the Polish Financial Supervision Authority (KNF), and then the FinTech Department was opened at the KNF Office. With its Innovation Hub programme, the department has contributed to creation of a positive atmosphere around FinTech in Poland.
The discussion about the legal status of tokens and, in particular, whether and when a token is a security or other financial instrument, is still gaining momentum. There are more and more proposals around this discussion that resolve this issue at the outset, recognising that tokens are intended to become securities. These are so-called security tokens, and the issues are sometimes called security token offerings (STOs).