Act No. 253/2008 Coll. on certain measures against the legalisation of proceeds of crime — known as the AML Act — applies to thousands of Czech entrepreneurs. Yet many of them don't know whether it applies to them. And ignorance of the law is no excuse — the Financial Analytical Office does not treat it as a mitigating factor during inspections.
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What Does 'Obliged Entity' Mean?
An obliged entity is a natural or legal person who is legally required to fulfil AML obligations — that is, to carry out client checks, maintain documentation, and implement an internal policies system.
It is not just about banks and financial institutions. The law applies to a broad spectrum of entrepreneurs.
Who Is an Obliged Entity Under § 2 of the AML Act?
You are an obliged entity if you operate in any of these areas:
- Real estate intermediation or trading in real estate
- Accounting, tax advisory, or auditing
- Legal services — lawyers, notaries, court executors
- Currency exchange activities
- Operating gambling activities
- Providing services related to virtual assets (cryptocurrencies)
- Forming legal entities or providing registered office services
- Trading in second-hand goods or accepting items as pledges (pawnbroking)
- Providing loans, leasing, or guarantees outside the banking sector
- Administration of trust funds
An obliged entity can be either a large company or a sole trader. What matters is the nature of the activity carried out — not the size of the business.
When Do Obliged Entity Obligations Not Arise?
The law also provides for exceptions. You are not required to prepare the internal policies system in writing if you do not employ other persons in that activity and you do not carry out the activity for more than one other obliged entity.
However, the core obligations — client checks, reporting suspicious transactions — always apply.
What Must an Obliged Entity Fulfil?
If you are an obliged entity, the law requires you to:
- Client due diligence (KYC) — verifying identity, identifying the beneficial owner, assessing risks before starting a business relationship
- Screening — checking the client against sanctions lists and the PEP register (politically exposed persons)
- Internal policies system (§ 21) — a written document describing your AML procedures
- Risk assessment (§ 21a) — analysis of money laundering risks specific to your business
- Employee training — at least once every 12 months
- Reporting suspicious transactions — notifying the FAU when money laundering is suspected
What Are the Penalties for Non-Compliance?
Violations of AML obligations can result in fines of up to CZK 10,000,000 or 10% of annual turnover for legal entities. Natural persons risk fines of up to CZK 1,000,000.
The FAU has significantly tightened inspections in recent years and the number of fines issued is growing year on year.
Not Sure? Find Out in 2 Minutes
If you still don't know whether you are an obliged entity, you don't have to study the law yourself. AML PROOF offers a free online test that gives you an answer in 2 minutes — based on your business sector and type of activity.
The test is free, requires no registration, and you get the result immediately.
Found Out You're an Obliged Entity? What's Next?
Registration in AML PROOF is free. So is your first AML case. The system guides you through the entire process — from setting up your obliged entity profile, through checking your first client, to generating documentation ready for the FAU.
Try it for free at amlproof.ai.