Is Poland Retreating from the Fight Against Money Laundering?
The Extension of Evidentiary Validity for Paper Share Certificates and Its Implications for International AML Compliance
I. Introduction
The Polish Ministry of Justice has recently introduced a bill amending the Commercial Companies Code, one provision of which raises substantial concerns from the perspective of international anti-money laundering standards. Article 28 of the proposed legislation would extend the evidentiary validity of paper share certificates by an additional two years—a measure that, while ostensibly protective of shareholder rights, arguably constitutes a retrograde step in Poland’s commitment to beneficial ownership transparency.
This analysis examines the proposed extension against the backdrop of evolving global AML standards, with particular attention to the Financial Action Task Force recommendations and the recently adopted EU Anti-Money Laundering Regulation 2024/1624. The central thesis advanced herein is that while the Ministry’s concerns regarding shareholder protection merit consideration, the chosen legislative response inadequately addresses the fundamental tension between transitional accommodations and the international consensus favoring the elimination of anonymous ownership instruments.
II. Legislative Context and Procedural Posture
Parliamentary Bill No. 2027 was submitted to the Sejm on November 28, 2025, and has proceeded through the legislative process at an accelerated pace. Following referral to first reading on December 2, 2025, the bill was considered at a plenary session on December 17, 2025, with the Extraordinary Committee for Codification Amendments issuing its report (Parliamentary Document No. 2087) the following day. The bill currently awaits second reading and final vote.
The expedited timeline reflects the legislative imperative to ensure entry into force of the evidentiary extension provision prior to the expiration of the existing five-year transitional period on March 1, 2026. Notably, the bill contemplates differentiated effective dates: Article 28 (extending evidentiary validity) and Article 33 (transitional provisions governing penalty proceedings) would enter into force on February 28, 2026, whereas the remaining provisions—including the elimination of the distinction between registered and bearer shares, enhanced disclosure obligations to the National Court Register, and expanded data requirements for shareholder registries—would take effect twelve months following promulgation.
III. Paper Share Certificates as Instruments of Asset Concealment
A. The Fundamental Question
Before proceeding to granular analysis of the proposed amendments, it is worth pausing to consider a threshold question: what legitimate purpose is served by paper share certificates that remain unregistered in electronic shareholder registries nearly five years after mandatory dematerialization took effect?
One cannot ignore that both bearer shares and materialized registered shares have long functioned as effective instruments for asset concealment—whether for legitimate purposes such as privacy protection, or for illicit ends including money laundering, judgment evasion, and creditor fraud. It appears statistically more probable that a substantial portion of unregistered shares remain outside the registry not due to managerial negligence, but rather as a consequence of deliberate decisions by holders who derive benefit from anonymity or opacity. The extension of the transitional period thus serves, in practice, not merely to protect aggrieved shareholders, but also—and perhaps primarily—to prolong the period during which paper share certificates may function as instruments of asset concealment.
B. The Mechanics of Risk: Why Paper Shares Present AML Concerns
To appreciate the magnitude of the threat, one must understand how paper share certificates enable circumvention of AML standards.
A bearer share constitutes a physical document in which the issuing company records no owner identification. Ownership is determined exclusively by physical possession of the paper certificate. Transfer of ownership occurs through simple delivery of the document—without notification to the company, without entry in any registry, and without trace in the banking system. An individual may thereby transfer assets worth millions of złoty by handing over an envelope containing documents, leaving no trail for tax authorities or financial institutions.
The problem, however, is not confined to bearer shares. Registered shares in paper form may likewise function as quasi-anonymous instruments where the owner executes a transfer form while leaving the transferee field blank—the so-called “blank transfer.” Such a document may subsequently circulate among successive holders, none of whom appears in the company’s share register until the final holder elects to disclose their identity. This creates what might be termed a “phantom period”—an interval during which the beneficial owner remains invisible to both the company and regulators.
C. AML Risk Taxonomy
Regulatory authorities classify paper share certificates as high-risk instruments by reason of three salient characteristics.
First, ownership anonymity. The beneficial owner appears in no central registry nor in company documentation. Banks cannot verify UBO (Ultimate Beneficial Owner) status against sanctions lists or PEP (Politically Exposed Persons) databases.
Second, transfer untraceability. Changes in ownership occur privately, without timestamps and without witnesses. Bad actors may pass ownership through multiple nominees within days, rendering source-of-funds determination practically impossible.
D. The “Panama Papers” Paradigm
Investigative journalism has revealed that bearer shares were commonly employed to hold bank accounts and real property. A typical structure involved a British Virgin Islands or Panamanian company (with bearer shares) holding London real estate. Physical share certificates were maintained in a lawyer’s safe. When the beneficial owner wished to sell the property, they simply handed the share certificates to the purchaser. No real property title changed hands, no transaction tax was paid, no bank observed the operation.
This same model operated—and potentially continues to operate—in Poland with respect to unregistered shares of private companies.
IV. The Ministry’s Justification
The Ministry of Justice contends that the term extension is necessary for shareholder protection. According to data compiled by the drafters, a significant proportion of private companies failed to discharge their obligation to execute agreements for maintenance of shareholder registries. Cases also occurred where agreements for registry maintenance were executed without transmission of the documentation necessary to establish the registry.
The bill’s explanatory memorandum states: “Shareholders were deprived of the ability to register their shares and therefore should not bear the adverse consequences of actions inconsistent with legal requirements undertaken by company boards.”
The Ministry further notes reported problems relating to loss or destruction of share documents. Following repeal of Article 357 of the Commercial Companies Code, issuance of duplicate share certificates is no longer possible. As the explanatory memorandum indicates: “Where a shareholder cannot utilize the simplified form of demonstrating membership rights—for example, due to destruction of the share certificate—and did not apply for issuance of a duplicate certificate pursuant to statutory provisions or Article 357 § 3 of the Commercial Companies Code (prior to repeal of that provision), they may only prove their rights through judicial proceedings, which requires adequate time for completion of such proceedings.”
This reasoning is comprehensible, and the situation of shareholders genuinely aggrieved by board inaction warrants protection. The question, however, is this: what is the proportion between aggrieved shareholders and those who consciously remain outside the registry? And is the appropriate response to corporate non-compliance an extension of the period during which paper documents retain any legal effect?
V. Undematerialized Shares as a Global AML Challenge
A. The International Consensus
The problem of paper share certificates not subject to registration enabling beneficial owner identification constitutes one of the most serious challenges to the global anti-money laundering system. Accordingly, the international regulatory consensus has shifted from “regulation” to “elimination” of such instruments.
B. The FATF Position
The Financial Action Task Force, the intergovernmental body establishing global anti-money laundering standards, has for years identified bearer shares as a significant threat to beneficial ownership transparency. FATF Recommendation 24, as revised in March 2022, requires states to take decisive action regarding such instruments. States should prohibit issuance of new bearer shares and require conversion or immobilization of existing shares “within a reasonable period,” which FATF assesses as approximately two years.
The March 2023 FATF Guidance specifies that the defining characteristics of bearer shares are: physical document form and impossibility of determining the owner’s identity. The definition also encompasses “other similar instruments without owner identification capability.” FATF expressly emphasizes that bearer shares create elevated money laundering and terrorist financing risk due to concealment of certificate holder identity.
C. European Union Requirements
EU Regulation 2024/1624 on the prevention of the use of the financial system for money laundering or terrorist financing, which enters into force on July 10, 2027 (officially entered into force on July 9, 2024, after being published in the EU’s Official Journal on June 19, 2024, but its provisions apply directly to Member States and obliged entities starting from July 10, 2027), contains in Article 79 unambiguous and stringent requirements regarding bearer shares, forming part of a broader package of risk mitigation measures addressing anonymous instruments.
Pursuant to Article 79(3) of the Regulation, companies are prohibited from issuing bearer shares. Existing bearer shares must be converted to registered shares, immobilized within the meaning of Regulation (EU) No. 909/2014, or deposited with a financial institution by July 10, 2029.
The sanction mechanism provided in the Regulation is of critical significance. For existing bearer shares not converted, immobilized, or deposited by July 10, 2029, all voting rights and profit distribution rights attached to such shares are automatically suspended until conversion, immobilization, or deposit occurs.
Moreover, the Regulation establishes a terminal deadline: all bearer shares not converted, immobilized, or deposited by July 10, 2030 shall be cancelled, resulting in corresponding reduction of share capital.
D. The Global Trend Toward Elimination
The overwhelming majority of jurisdictions have abolished bearer shares entirely. Furthermore, even where bearer shares remain technically lawful, they encounter substantial practical limitations. Banks decline to open accounts for companies with bearer shares due to the impossibility of conducting ongoing KYC verification. The global financial system is constructed on the principle of knowing the ultimate beneficial owner of every account.
VI. The Polish Reform of 2019
Against this backdrop, the Polish dematerialization reform of 2019 appeared as an exemplary implementation of international AML standards—indeed, in an enhanced version.
The Act of August 30, 2019 introduced in Poland universal and mandatory dematerialization of all shares of private companies—both bearer and registered shares. From March 1, 2021, paper share certificates lost legal force, and all shares must exist exclusively as electronic entries in shareholder registries maintained by authorized entities.
It bears emphasis that the Polish reform went considerably beyond international requirements, which focus primarily on bearer shares. The legislature correctly determined that complete dematerialization of all shares—regardless of type—best serves transaction transparency and beneficial owner identification.
Under the original text of Article 15 of the amending act: “1. The binding force of share certificates issued by the company expires by operation of law on March 1, 2021. (…) 2. Share certificates retain evidentiary force solely for purposes of demonstrating to the company by the shareholder that membership rights pertain to them, for a period of five years from entry into force of this Act.”
Significantly, the very construction of Article 15 contained a mechanism constituting de facto suspension of corporate rights for shareholders not entered in the registry. Since from March 1, 2021 the binding force of share certificates expired, and the document retains merely evidentiary force “solely for purposes of demonstrating to the company by the shareholder that membership rights pertain to them,” a shareholder lacking registry entry cannot exercise voting rights or participate in general meetings. The share certificate thus serves only for legitimation purposes in obtaining registry entry—not for direct exercise of corporate rights.
The Polish legislature thus introduced in 2019 a solution approximating the rights suspension mechanism recommended by FATF and subsequently adopted in EU Regulation 2024/1624. This reform implemented FATF postulates regarding provision of adequate, accurate, and current beneficial ownership information.
As the explanatory memorandum to the current bill aptly observes: “The reform enabled creation of uniform legal frameworks for an autonomous regime governing trading in shares of companies outside organized market trading, and also limited the scope of risks associated with securities disposition. The objectives assumed by the legislature were undoubtedly achieved.”
VII. The Essence of the Amendment: Extension of Evidentiary Validity
The legislature provided a transitional period: paper share certificates were to retain limited evidentiary validity for five years—that is, until March 1, 2026. During this time, shareholders could utilize old documents exclusively for purposes of demonstrating to the company that membership rights pertained to them—with the ultimate objective of registering their shares in electronic form.
The proposed amendment extends this period to seven years, shifting the terminal date to March 1, 2028.
In this context, the two-year extension of evidentiary validity for paper share certificates constitutes movement contrary to international standards—not because it introduces new capacity to exercise rights from unregistered shares (such capacity has been unavailable since March 1, 2021), but because it defers the necessity of definitively resolving the problem of shares permanently remaining outside the registry.
This problem is particularly acute for unregistered bearer shares. As the drafters themselves acknowledge in the explanatory memorandum to Article 32: “in the case of bearer shares that have not been registered, identification of the entitled shareholder is impossible.” This means that for an additional two years, completely anonymous instruments may function in commerce—admittedly without capacity to exercise corporate rights therefrom, but still with capacity to present them to the company and potentially obtain registry entry.
VIII. Elimination of the Distinction Between Registered and Bearer Shares
The proposed amendment also introduces a significant systemic change—elimination of the existing classification of shares as registered or bearer. As the explanatory memorandum indicates: “Mandatory dematerialization of shares has resulted in every share—regardless of whether it is a bearer or registered share—having the status of a registry share, enabling identification also of the shareholder entitled to rights from bearer shares. Accordingly, maintenance of the current classification of shares as registered and bearer is without justification.”
This change represents a logical consequence of dematerialization and merits approval from an AML standards perspective. However, proposed Article 32 provides for retention of the registered/bearer distinction with respect to shares not yet registered. The explanatory memorandum explains: “This results from the fact that in the case of bearer shares that have not been registered, identification of the entitled shareholder is impossible.”
Attention should be drawn to the differentiated effective dates for these changes. While the extension of evidentiary validity for share documents takes effect on February 28, 2026, elimination of the registered/bearer distinction occurs only twelve months following promulgation. This asymmetry means that for a certain period, two regimes will operate in parallel: the new evidentiary validity deadline for paper documents and the existing share classification.
IX. Jurisprudential Developments: The Kraków Court of Appeal Decision
It merits noting that case law has already produced an interpretation of transitional provisions favorable to shareholders not entered in the registry. In its judgment of June 20, 2024 (Case No. I AGa 91/23), rendered in a matter involving protracted corporate litigation in which the plaintiff was unlawfully denied entry in the shareholder registry, the Kraków Court of Appeal articulated significant holdings regarding protection of rights of materially entitled shareholders.
The Court held that dematerialization of share documents does not cause loss by the shareholder of rights arising from shares: “This regulation, however, does not lead to loss of shareholder status and does not deprive the person to whom such rights pertained of corporate rights or property rights (material standing).” The Court further recognized that entry in the shareholder registry has declaratory character (constituting a rebuttable presumption), and that a shareholder may prove effectiveness of acquisition of share rights in judicial proceedings.
Simultaneously, the Court of Appeal emphasized that absence of entry in the shareholder registry has consequences for formal standing. In the case under consideration, the Court dismissed the appeal in the portion concerning the demand for declaration of invalidity of resolutions, finding that “there were therefore no formal grounds for notifying the plaintiff of convocation of the General Meeting of Shareholders.” The Court indicated, however, that a materially entitled shareholder not entered in the registry may be deemed a “shareholder unjustifiably denied participation” within the meaning of Article 422 § 2(3) of the Commercial Companies Code, opening the path to seeking annulment of resolutions.
This decision stands in complex relationship to the proposed amendment. On one hand, it confirms that materially entitled shareholders do not lose their rights by reason of absence from the registry and may seek judicial protection. On the other hand, it demonstrates that the judicial path is complicated and time-consuming—the case underlying the judgment proceeded for years and has not yet reached final resolution.
From an AML standards perspective, the judicial pathway may nonetheless be preferable, as it does not require extension of the period during which paper share certificates—including potentially anonymous bearer shares—function in commerce, though one must acknowledge that it imposes substantially higher evidentiary and procedural burdens on aggrieved shareholders.
X. Polish Regulation and the EU Model: A Comparative Analysis
Comparison of the 2019 Polish regulation with EU Regulation 2024/1624 reveals significant structural similarity. In both instances, a two-stage mechanism was employed: first, suspension of capacity to exercise corporate rights from unregistered shares, followed—in the EU model—by their cancellation upon expiration of the terminal deadline.
The Polish regulation under Article 15 of the amending act has implemented the first stage of this mechanism since March 1, 2021. Expiration of the binding force of share certificates with retention of merely limited evidentiary validity means that a shareholder not entered in the registry cannot exercise voting rights or property rights—they may only demonstrate to the company that membership rights pertain to them for purposes of obtaining entry. This constitutes the functional equivalent of the rights suspension provided in Article 79(3) of the EU Regulation.
The critical distinction is that the EU Regulation provides a second stage—automatic cancellation of unregistered shares after July 10, 2030. Polish regulation contains no such mechanism. Rather than proceeding to the next stage and introducing a terminal deadline with cancellation sanction, the proposed amendment extends the transitional period, deferring the moment at which the problem of shares permanently remaining outside the registry must be confronted.
XI. Implications for Poland’s AML Rating
In the context of cyclical evaluations of Poland by MONEYVAL (the Council of Europe Committee of Experts on the Evaluation of Anti-Money Laundering Measures), the extension of evidentiary validity for paper shares may be interpreted as weakening of the beneficial ownership transparency regime.
MONEYVAL evaluators assess not merely the letter of the law, but also its effectiveness in practice. The circumstance that a significant proportion of companies failed to discharge dematerialization obligations, and that the state’s response is extension of the transitional period rather than introduction of a terminal deadline with cancellation sanction, may be construed as systemic weakness.
FATF guidance emphasizes that mutual evaluations generally reveal insufficient effectiveness levels in combating abuse of legal persons for money laundering and terrorist financing purposes at the global level. Compliance with Immediate Outcome 5 (concerning beneficial ownership transparency) is the lowest among all outcomes, with merely nine percent of states meeting effectiveness requirements in this area. By extending the period during which paper share certificates function, Poland risks deterioration of its position in this assessment.
XII. Alternative Approaches
The Ministry of Justice, responding to comments submitted during the legislative process, indicated that introduction of more radical solutions—such as mandatory buyout or cancellation of unregistered shares—would be premature absent precise analysis of the problem’s scope.
The Ministry argues: “Without such determinations, introduction of solutions aimed at depriving shareholders of their rights arising from shares would be premature and, above all, burdened with significant risk of adopting erroneous assumptions that could result in harm to shareholders and companies.”
The Ministry further invokes constitutional guarantees of property rights, indicating that deprivation of membership rights should occur only upon compensation, in accordance with Articles 21, 64(3), and 31(3) of the Constitution of the Republic of Poland.
This reasoning is comprehensible; however, it does not alter the circumstance that extension of transitional periods does not resolve the problem but merely defers it.
A. Introduction of Terminal Deadline with Cancellation Sanction
Rather than extending evidentiary validity of documents, it would be more rational to introduce the mechanism provided in EU Regulation 2024/1624—a terminal deadline upon expiration of which unregistered shares are cancelled by operation of law.
Article 79(3) of EU Regulation 2024/1624 provides that all bearer shares not converted, immobilized, or deposited by July 10, 2030 shall be cancelled. As FATF guidance indicates, in France holders of physical bearer shares who did not register shares within the designated eighteen-month period were deprived of voting rights but not of the shares themselves. Only after five years did unregistered shares become subject to compulsory sale by the issuer. Such a graduated sanction mechanism could serve as a model for the Polish legislature.
Poland will in any event be required to conform its provisions to requirements of EU Regulation 2024/1624 before July 10, 2029. Rather than extending the transitional period to 2028, it would be more rational to utilize the current amendment to introduce a mechanism consistent with forthcoming EU requirements—ensuring legislative coherence and avoiding necessity of another amendment in the near term.
XIII. Conclusion
The extension of evidentiary validity for paper share certificates from five to seven years constitutes a solution comprehensible from the perspective of protecting shareholders aggrieved by board inaction. This does not alter the circumstance, however, that it represents a step backward from the perspective of international anti-money laundering standards.
The 2019 Polish regulation was pioneering—already at that time introducing a mechanism constituting de facto suspension of corporate rights for shareholders not entered in the registry, anticipating solutions subsequently adopted in EU Regulation 2024/1624. The logical next step would be introduction of a terminal deadline with cancellation sanction for unregistered shares—as the EU Regulation provides. Instead, the proposed amendment extends the transitional period, deferring the necessity of confronting the problem of shares permanently remaining outside the registry.
Particular concern arises from the circumstance that the extension applies also to unregistered bearer shares, in respect of which—as the drafters themselves acknowledge—”identification of the entitled shareholder is impossible.” For an additional two years, completely anonymous instruments may thus function in commerce, standing in contradiction to fundamental premises of international AML standards.
FATF and the European Union are moving unambiguously toward complete elimination of bearer shares in documentary form or their strict immobilization with full beneficial owner identification. EU Regulation 2024/1624 provides a precise timeline: prohibition on issuance of new bearer shares, obligation of conversion or immobilization by July 10, 2029, automatic suspension of rights from unregistered shares, and ultimately their cancellation after July 10, 2030.
The Ministry of Justice confronts a difficult dilemma: protect shareholders bearing no fault for board omissions, or consistently implement international transparency standards. A compromise solution was chosen, one which may nonetheless weaken Poland’s position in international assessments of its AML regime.
The legislature would be well advised to consider whether short-term shareholder protection warrants the long-term reputational costs. Introduction of mechanisms consistent with EU Regulation 2024/1624—a terminal deadline with cancellation sanction for unregistered shares—might prove more efficacious than extending the period during which paper documents function in commerce. The experiences of France and Switzerland, referenced in FATF guidance and now sanctioned in EU law, demonstrate that reconciliation of shareholder rights protection with consistent pursuit of transparency objectives is achievable—through graduated sanctions and establishment of clear, terminal deadlines.
Author: Robert Nogacki, Legal Counsel (Radca Prawny), Skarbiec Law Firm, specializing in international tax law, corporate restructuring, and asset protection
Founder and Managing Partner of Skarbiec Law Firm, recognized by Dziennik Gazeta Prawna as one of the best tax advisory firms in Poland (2023, 2024). Legal advisor with 19 years of experience, serving Forbes-listed entrepreneurs and innovative start-ups. One of the most frequently quoted experts on commercial and tax law in the Polish media, regularly publishing in Rzeczpospolita, Gazeta Wyborcza, and Dziennik Gazeta Prawna. Author of the publication “AI Decoding Satoshi Nakamoto. Artificial Intelligence on the Trail of Bitcoin’s Creator” and co-author of the award-winning book “Bezpieczeństwo współczesnej firmy” (Security of a Modern Company). LinkedIn profile: 18 500 followers, 4 million views per year. Awards: 4-time winner of the European Medal, Golden Statuette of the Polish Business Leader, title of “International Tax Planning Law Firm of the Year in Poland.” He specializes in strategic legal consulting, tax planning, and crisis management for business.
