Background

In general, "cross-border activities" means activities actively performed by a financial institution from a foreign country within the territory of Poland or by a domestic financial institution on the territory of a host state, if conducted by the financial institution without the participation of a branch.

It is important to note that pursuant to international law, the interpretation of the agreement and the performance made on its basis should always be undertaken in accordance with Polish law as to whether a financial institution's services are deemed "cross-border activities." This is due to the fact that this is subject to Polish public law, which is something that parties cannot exclude contractually.

It should be noted that in the case of financial institutions established in the EU, licensing and notification requirements are usually simplified, and if such entities wish to expand their activities into another member state, they do not have to apply for separate authorization in every single EU country. The rules concerning the conduct of cross-border operations of financial institutions are based on the principle of a single passport, which means that an institution that has been authorized in one country can provide services throughout the European Union on the basis of such authorization. Cross-border activities engaged in by financial institutions established and licensed in the EU may, depending on the circumstances, fall within the scope of freedom of establishment or freedom to provide services on the European single market.

Performing banking operations

In relation to banking operations, cross-border activities can only be conducted in Poland by a credit institution.

"Credit institution" is defined by the Banking Law, with reference to Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and amending Regulation (EU) No 648/2012 (CRR), as an undertaking the business of which is to take deposits or other repayable funds from the public and to grant credits from its own account, having its seat outside the Republic of Poland in one of the EU member states. This regulation also applies to European Economic Area (EEA) member states.

The definition of "credit institution" under Polish law means that a bank seated outside the Republic of Poland and in a state that is not a member of the EU or the EEA (being defined in the Banking Law as a "foreign bank") cannot carry on cross-border regulated banking activities in Poland; such foreign banks may perform banking activities in Poland through a branch after the applicable licensing requirements have been met.

Performing insurance/reinsurance activity

Cross-border insurance/reinsurance activities can only be conducted in Poland by foreign insurance/reinsurance entities. "Foreign insurance entity" is defined as a foreign entity (i.e., a natural person, a legal person or an organizational unit without legal personality) carrying on insurance activities outside the territory of Poland. Similarly, "foreign reinsurance entity" is defined as a foreign entity carrying on reinsurance activities outside the territory of Poland.

Foreign insurance entities and foreign reinsurance entities from an EU member state other than Poland may conduct insurance activities in Poland if they have obtained an appropriate permit to engage in such activities in the country where they are seated. Such activities may be carried out through a branch or on the basis of freedom to provide services after the relevant notification procedure has been completed.

A foreign insurance company with its seat in a country that is not an EU member state may only undertake and perform insurance activities in Poland through its main branch after the applicable licensing requirements have been met.

Performing brokerage activities

Cross-border brokerage activities can be conducted in Poland by foreign investment firms (i.e., investment firms that are established in an EU member state or an EEA country).

"Foreign investment firm" is defined in the Act on Trading in Financial Instruments as a legal person (or an organizational unit without legal personality), having its registered office or its head office in another member state of the EU and/or the EEA, or a natural person with its place of residence in another member state, performing investment services and activities under a license granted by the competent national supervisory authority in another member state, or a foreign credit institution.

Foreign investment firms may, without holding a Polish brokerage license, perform brokerage activities in Poland if a given activity is covered by the authorization granted to such investment firm by the competent supervisory authority of another member state being the country where its registered office is located. Brokerage activities may be conducted by establishing a branch in Poland or without opening a branch, which includes performing such activities through an agent residing in another member state or on the territory of Poland.

Third-country investment firms (i.e., non-EU or non-EEA investment firms having their registered offices on the territory of a country other than a member state of the EU and/or the EEA) may only conduct brokerage activities in Poland in the form of a branch after the applicable licensing requirements have been met.

It is worth noting that reverse solicitation may be used by both foreign investment firms and third-country investment firms to access Polish clients without triggering licensing requirements. Reverse solicitation is only permitted if a client, at the client's own exclusive initiative, takes steps to start a business relationship with an investment firm outside of Poland. Another important caveat is that even though an initial contract was initiated by a client, another contract that expands the scope of the first is not legally possible under reverse solicitation if it was proposed by the foreign or third-country investment firm. This means that offering services in addition to the ones requested by the client at the client's own exclusive initiative is prohibited under reverse solicitation rules in Poland.

Performing payment services

Cross-border payment services can only be conducted in Poland by an EU payment institution.

"EU payment institution" is defined in the Payment Services Act as a legal entity granted a license by the competent national supervisory authority to carry on payment services. As stated in Article 96 of the Payment Services Act, an EU payment institution may perform payment services in Poland through a branch, as a cross-border activity or through the intermediation of an agent within the scope of the authorization issued by competent supervisory authorities. The competent national supervisory authorities should notify the KNF of such entity's intention to conduct payment services.

Performing investment fund manager activity

A foreign fund (i.e., an open-end investment fund or an investment company that has obtained permission from the competent authority of a member state to operate in accordance with the provisions of EU law regulating collective investments in securities) may sell its units in Poland, provided that: (i) the KNF obtains, from the competent authorities of the home member state of the foreign fund, notification of the intention to sell units of the foreign fund in Poland; and (ii) other regulatory requirements are met. An EU AIF can be marketed in Poland among: (1) professional investors; and (2) retail investors – but only in the case of an EU AIF authorized as a ELTIF pursuant to Article 5 of Regulation (EU) 2015/760 of the European Parliament and of the Council of 29 April 2015 on European long-term investment funds.

An EU manager may market an EU AIF it manages in Poland if the KNF receives notification from the competent supervisory authority of the EU manager's home state of its intention to market such EU AIF in Poland.