Certificate of Origin And Reporting Obligation For Cryptocurrencies in Germany

The German Money Laundering Act (Geldwäschegesetz, GwG) obliges, among others, credit institutions, i.e. banks as well as service providers that facilitate the exchange of cryptocurrencies into fiat currencies and vice versa, to submit a suspicious money laundering report immediately in certain cases.

The decisive factor for a reporting obligation is not only the amount of the transaction or the value of the cryptocurrency. The obligation to report already exists if there is a suspicion that

1. the asset originates from illegal activity,
2. the asset or a transaction is related to terrorist financing or
3. the contracting party does not disclose whether it is acting for a beneficial owner.

The money laundering suspicion report is reported to the Financial Intelligence Unit and results in the temporary freezing of the respective transaction.

As a rule, the bank or financial service provider will only complete the transaction - if at all - once the Financial Intelligence Unit or the public prosecutor's office has approved the execution of the transaction.

This, however, is not the only unpleasant consequence of a suspected money laundering report. The authority has the possibility to impose a warning fine on crypto investors who are liable for an unfounded suspicion.

Whereas if the authority considers the suspicious money laundering report to be well-founded, this can lead to a considerable financial and criminal burden for crypto investors. On the one hand, a permanent blocking of the account is often to be expected. On the other hand, the authority has the possibility to initiate criminal proceedings based on the suspicion of money laundering.

In order to invalidate the indications of a suspicious activity report and thus also eliminate more serious consequences, a convincing certificate of origin for the cryptocurrencies is required. With such a certificate of origin, a crypto investor can prove the origin of their crypto investments.

Ideally, the investor shall submit this certificate to their bank before the transaction is carried out. At the latest, however, after a request from the bank, the investor ought to be able to provide a certificate of origin in a timely manner.

The problem:

• In order to create a valid certificate of origin, a complete and legally secure processing of all crypto data is indispensable.
• Admittedly, practice shows that most crypto investors can, at most, often provide an up-to-date overview of assets.
• This is better than nothing, but, in most cases, it is no substitute for a review of the transaction history, which is often considerably hampered due to incomplete data.

To ensure that this circumstance does not lead to their downfall, we offer solutions for the legally compliant and complete processing of all relevant data using professional software. In doing so, we primarily address possible gaps in the history and missing data.

By being able to cleanly process the transaction history, even if data is missing, one significantly minimizes the risk of a suspected money laundering report and the associated negative consequences.

Fortunately, a complete certificate of origin is not always required. Many clients simply need a genuine asset confirmation as proof of their crypto assets, e.g. to present to authorities or to banks or other lenders in connection with the granting of loans. We will be happy to quickly and bindingly determine the current value of your crypto investments and create a corresponding asset confirmation.