Basics and objectives

The Money Laundering Act forms the central legal basis for combating money laundering and terrorist financing in Germany. The last major amendment was made as a result of the implementation of the 6th EU Money Laundering Directive and brought with it significant tightening. The law obliges a wide range of companies to implement preventive measures against money laundering. The regulations not only affect banks and financial service providers, but also many other sectors such as real estate agents and crypto service providers. The risk-based approach is at the heart of the legal requirements and requires an individual risk analysis. The obligated parties must set up internal security systems and controls. The identification of customers and beneficial owners is a core obligation of the law. All measures must be fully documented. Cooperation with the supervisory authorities will be intensified. Sanctions for violations have been significantly tightened. International cooperation is being strengthened.

Obliged parties and scope of application

The GwG defines an extensive circle of obligated parties from various economic sectors. Credit institutions and financial service providers are subject to the strictest requirements of the law. Insurance companies must implement specific preventive measures. Real estate agents and notaries are particularly obliged in real estate transactions. Crypto service providers have been included in the scope of application as new obligated parties. Auditors and tax consultants must comply with AMLA obligations for certain activities. Goods traders are obliged for cash transactions of 10,000 euros or more. Casinos and online casinos are subject to special monitoring obligations. Lawyers must comply with the requirements for cataloged activities. The art trade has been included in the scope of application. The obligations also apply to foreign branches. Group-wide compliance must be ensured.

Due diligence and customer identification

The due diligence obligations form the core of the preventive measures in the AMLA. The contractual partner must be identified on the basis of valid documents. The beneficial owner must be identified and verified. The determination of PEP status (Politically Exposed Person) is mandatory. Continuous monitoring of the business relationship must be ensured. Increased due diligence obligations apply in the case of increased risks. The documentation of measures must be complete and comprehensible. Customer information must be updated regularly. The use of electronic identification procedures is possible under certain conditions. The risk-based design of the measures is required. Employee training must be carried out regularly. The processes must be set out in writing.

Internal security measures

The GwG stipulates the implementation of appropriate internal security measures. A money laundering officer must be appointed if the company is large enough. The development of internal principles and procedures is mandatory. Employees must be regularly trained and sensitized. Employee background checks must be carried out. A whistleblower system for anonymous reports must be set up. The documentation of all measures must be complete. The effectiveness of the systems must be reviewed regularly. The processes must be adapted to new risks. Cooperation with the authorities must be ensured. Group-wide compliance must be ensured. The technical systems must be up to date.

Reporting obligations and official cooperation

Suspicious activity reports must be made immediately to the Financial Intelligence Unit. The threshold for suspicious activity reports has been deliberately set low. The reporting obligation applies regardless of the amount involved. Cooperation with the law enforcement authorities has been intensified. Information may be passed on to other obligated parties under certain conditions. The confidentiality of the reports must be guaranteed. The documentation of the reports must be complete. The authorities have extensive rights to information. International cooperation has been strengthened. The reporting channels have been digitized. Reports are analyzed centrally. Feedback to the obliged entities has been improved.

Sanctions and legal consequences

The AMLA provides for severe sanctions in the event of breaches of obligations. Fines of up to several million euros can be imposed. The personal liability of management has been tightened. Publication of violations is possible (naming and shaming). Criminal prosecution for serious violations has been intensified. The supervisory authorities have extensive powers of intervention. Special audits can be ordered. Business activities can be restricted or prohibited. The limitation periods have been extended. International enforcement has been improved. The sanctions also apply to management bodies. The preventive effect has been strengthened.

Practical implementation and outlook

The implementation of AMLA requirements poses major challenges for many companies. The technical systems must be continuously adapted to new requirements. Employee training must be regularly updated. The documentation obligations require considerable resources. The digitalization of processes is being driven forward. International harmonization is progressing. The requirements will become even stricter. The importance of prevention is increasing. Technical developments must be taken into account. The costs of compliance are rising. Professionalization will continue. The effectiveness of measures will be evaluated.