Asset recovery in cases of cross-border fraud in Polish law – new solutions and opportunities regarding bank liability

Joanna Bogdanska
KW Kruk and Partners Law Firm, Warsaw, Poland
Joanna.bogdanska@legalkw.pl

Jaroslaw Kruk
KW Kruk and Partners Law Firm, Warsaw, Poland
Jaroslawk.kruk@legalkw.pl

The concept of cross-border fraud in the Polish system is understood as a crime in which a perpetrator residing in one country commits fraud to steal property belonging to a person residing in another country or using tools and measures located in other jurisdictions, for example, bank accounts.

It should be emphasised that there has been a significant increase in the number of events related to cross-border fraud in which the Polish jurisdiction is involved. Progress in computerisation and digitisation, in particular in the banking sector, the development of information technology and the widespread use of the internet and email, especially in correspondence with contractors, are of particular importance in this respect. In addition, the relative ease of opening bank accounts in Poland, also by non-nationals, is of great importance. The above-mentioned factors make cross-border fraud more frequent than crimes against property in this jurisdiction.

Phishing is one of the most common types of cross-border fraud in Poland, and consequently, the crime of money laundering. The modus operandi is very different. Starting from the simplest methods, such as impersonating a decision-making person in the company and ending with more complex factual states. The effect, however, remains the same: on an account in a Polish bank, usually empty and previously unused, significant funds are transferred from overseas accounts. Then, these funds are transferred in their entirety to other foreign accounts in jurisdictions considered ‘difficult’ or are paid out in cash. One way or another, as a result, the accounts in Poland are cleared as Poland is not the final destination of these funds, but is merely a place that allows relatively trouble-free laundering of funds. This also means that Poland is the last jurisdiction in which it is possible to stop and secure these funds.

Under Polish legal order, both criminal law and civil law are used to combat cross-border fraud. The best way to combat this type of crime is to act on many simultaneous levels, ie, initiating criminal proceedings and, at the same time or shortly afterwards, initiating civil proceedings. Undoubtedly, in the field of combating cross-border fraud, criminal proceedings are of great importance in the Polish legal world. The initiation and conduct of criminal proceedings gives, in principle, the possibility of quickly examining the case and obtaining seizure of assets, especially from bank accounts. Such frequent initiation and conduct of criminal proceedings in this regard is also supported by the fact that some evidence can only be obtained in criminal proceedings, in particular, evidence covered by banking, tax or telecommunications secrecy. However, this does not constitute a rule. In some cases, it may turn out that civil proceedings will be conducted more effectively than criminal proceedings. Furthermore, the prosecutor’s office may discontinue the case due to the failure to detect the perpetrator or indicate that the case should be resolved by a civil court. This is particularly the case in more complex fraud cases, including, for example, transaction frauds, where the criminal courts usually rule on the crimes and refer the client to the civil court for compensation. However, taking into account that very often the perpetrators who have been identified are only substitutes and do not have any property from which compensation for damages could be demanded, it is necessary to consider asking another entity involved in the case to repair the damage.

It is reasonable and legally justified to demand that the bank pay compensation, in particular, if the bank violates the provisions of the Banking Law[1] or fails to fulfil its obligations under the Act on Counteracting Money Laundering and Financing of Terrorism.[2] Possible liability of the bank may arise in a situation where criminals manage to withdraw or transfer funds from a Polish account. In practice, there are often situations where banks, in an objective manner, do not exercise due diligence in verifying the beneficiary of the account and attack transfers on the account. Polish anti-money laundering regulations as well as binding guidelines of supervisory authorities of banks in Poland formulate the bank’s obligations in a detailed and unambiguous way, both in terms of periodic verifications and activities related to a suspicious beneficiary or transaction. Such clearly defined obligations give the basis for looking for responsibility, at least in part, by the bank. In many cases, the bank, in taking these actions that the bank is obliged to perform by law should lead to securing at least part of the funds.

What may be the norm in common law countries is also starting to become a reality in Poland. The possibility of holding banks accountable gives aggrieved parties an instrument to effectively seek recovery of stolen funds.