The new German Money Laundering Act has been in force since January 1, 2020. The obligation to introduce a money laundering risk management system affects almost all companies and organizations, not only those in the financial sector. The new Money Laundering Act defines money laundering prevention as a management responsibility: obligated companies must appoint a "member at the management level" who is responsible for the risk management. In addition to that, many companies have to appoint an Anti-Money Laundering Officer.

A company's management is therefore responsible for ensuring that the comprehensive obligations arising from the Money Laundering Act are implemented, in particular

  • the preparation and maintenance of a risk analysis,
  • the implementation of internal anti-money laundering measures,
  • monitoring compliance with the customer due diligence requirements,
  • implementing a system for the immediate submission of suspicious activity reports.

However, the responsibilities laid down in the German Money Laundering Act are often open to interpretation and there is hardly any case law or any other published guidance from the authorities. In Germany, more than 100 supervisory authorities are responsible for the obligated companies in the non-financial sector and sometimes these authorities investigate and proceed in completely different ways.

Authorities are upgrading

The next amendment of the Money Laundering Act is already just around the corner: the EU Commission has already announced further measures to ensure a more effective prevention of money laundering and terrorist financing in the form of an AML/CTF action plan and has published a dedicated roadmap. Legislators and authorities are set to combat money laundering and terrorist financing more effectively in the coming years and have thus significantly tightened the requirements for risk management. The FATF German audit is currently looking into the effectiveness of German regulations and measures.

Sanctions

Violations of the German Anti-Money Laundering Act can lead to severe penalties. There are more than 80 administrative offences laid out in the statute that can be punished with fines of up to 5 million Euros or up to 10% of an organization's previous year's turnover. In the event of a breach of supervisory duties, even higher fines can be imposed under Section 130 OWiG. In addition, further sanctions may be imposed:

  • public announcement of all measures and decisions imposing fines for a period of five years (naming and shaming the persons concerned),
  • Entries in the central business register,
  • confiscation of assets,
  • prohibitions by the supervisory authority,
  • risk of criminal liability of the management for reckless money laundering.

Our expertise

Attorney Dr. Auffermann has many years of practical experience in the area of anti-money laundering. He advises companies of all sectors and industries on all issues relating to the practical implementation of AML obligations. Dr. Auffermann also advises and represents supervisory authorities and conducts special audits and investigations. He is head of the money laundering prevention working group at DICO and has been money laundering prevention officer at the Berlin Bar Association.