DE  |   -- EN  |   -- RU

Money Laundering Compliance in Germany

Measures to prevent money laundering in Germany

In recent years, the demands placed on companies and credit institutions in terms of preventing money laundering have steadily increased in Germany. Money laundering, the financing of terrorism and organized crime are being combated more intensively at national and international level.

Anti-money laundering (AML) refers to the laws and regulations in Germany that aim at prevening money laundering by uncovering attempts to disguise illicit funds as legitimate income.

Why AML compliance?

Among other things, extensive identity verification, monitoring and reporting obligations have been introduced. These obligations are mainly regulated by the German Money Laundering Act (Geldwäschegesetz, GwG), which is also being tightened up on a regular basis. Most recently, the European legislator again increased the requirements for credit institutions and companies with its fourth and fifth money laundering directive.

Companies with an effective anti-money laundering management help making it more difficult for organized crime to disguise illegal cash flows. This also reduces the risk of being caught in the public prosecutor's crosshairs. Furthermore, companies that disregard AML guidelines are threatened with high fines.

Companies in Germany are obligated to perform risk analysis

With the fourth and fifth money laundering directives, the EU is placing a focus on internal corporate risk management. According to these directives, companies are required to first determine the specific money laundering risks existing in their company (risk analysis). This risk analysis must be documented in an auditable manner and updated regularly.

Based on this individual risk analysis, appropriate security measures must then be taken in a second stage. In the case of corporations and groups of companies, the parent company must perform the risk analysis for the entire group. Internal prevention measures must be uniform throughout the group. However, firms that are not directly obligated under the German Money Laundering Act should also take appropriate internal (security) measures to prevent possible violations of money laundering obligations that might also be relevant under criminal law. 

An anti-money laundering audit can help verify if a company has a proper and working AML program in place.

Non-compliance may result in severe sanctions

The requirements of the law on money laundering are not only difficult to understand due to their complexity, but also entail considerable liability and criminal law risks in the event of non-compliance. First of all, the German Money Laundering Act contains its own provisions on fines, which punish

  • an omitted or incorrectly assessed risk analysis,
  • failure to document or review the results of the risk analysis,
  • omission of internal security measures,
  • failure to implement internal security measures throughout the group

with a fine of up to 150,000 Euros in case of intent, otherwise with a fine of up to one hundred thousand Euros.

There is also the threat of a corporate fine under the Administrative Offences Act (Section 30 OWiG). In the most extreme case, criminal proceedings may be instituted against the persons involved and the managing director or the Executive Board may be held personally liable.

Panama Papers, FinCEN Files and others

Over the past few years, various journalistic investigations have uncovered the fact that money laundering and tax evasion still occur despite comprehensive tightening of laws regarding AML compliance. We are observing that the authorities are taking increasingly harsher action and are reacting with ever lower thresholds to suspicious reports.

WINHELLER supports your company in AML compliance

We offer our clients a comprehensive range of anti-money laundering compliance services. These include, among others:

  • Execution and documentation of internal risk analysis
  • Regular updating of the risk analysis
  • Development and implementation of (group-wide) internal security measures such as
    • Creation of internal company guidelines (code of conduct, checklists and an AML manual)
    • Regular training of employees
    • Checking the employees' dependability
    • Complaint management
    • Notification systems, whistle blowing guidelines
    • AML compliance Helpdesk
  • Anti-money laundering audit procedures, efficiency and effectiveness audit, audit documentation, follow-up audits
  • Assumption of the position and tasks of an external money laundering officer
  • Criminal defense both for administrative offences and criminal proceedings in the event of accusations of violations in connection with AML obligations

Your attorney for money laundering compliance in Germany

Would you like to carry out a risk analysis, establish internal (security) measures with regard to AML compliance or is your company already being investigated for possible violations of money laundering obligations? Our experts are at your disposal. Your contact persons are

The easiest way to contact us is to call (+49 69 76 75 77 80) or send us an e-mail (info@winheller.com). Do not hesitate to contact us with your specific questions.

WINHELLER MLA/KYC Tool

    The challenge

    The legislation on tracing profits from serious criminal activity (German Money Laundering Act, MLA) intends to ensure greater transparency in financial transactions. Due to the extensive design and the numerous reporting, due diligence and documentation obligations to be observed, which serve to combat terrorist financing and are intended to prevent the concealment of the origin of funds, companies as well as lawyers and tax advisors must maintain suitable measures in order to be able to comply with the corresponding due diligence obligations.

    The MLA places specific obligations on certain companies and individuals: Among others, financial, legal and real estate companies, who (as well as the explicitly mentioned art dealers) often deal with large amounts of money, are listed as obligated parties by the MLA. These obligated parties must comply with the strict auditing duties of the MLA. In practice, obligated parties are required to identify the contracting party and, if applicable, the person acting on its behalf.

    In addition, the general due diligence obligations include clarifying whether a beneficial owner exists behind the contracting partner, i.e. one or more persons who hold(s) more than 25 percent of the capital shares or exercise(s) more than 25 percent of the voting rights and thus personally profit(s) from the transaction.

    The solution

    The fully digital MLA tool developed by WINHELLER offers a solution-oriented approach to the identification and verification of contracting partners, taking into account the current legal requirements regarding money laundering in Germany. In addition to carrying out the audit process in compliance with the German Money Laundering Act (Geldwäschegesetz, GWG), an automated query of the data from the (potential) contracting partner is carried out together with detailed documentation and evaluation of current and (if required) completed audits. If necessary, amendments can be made by means of risk assessments to be individually designed.

    Scope of services

    Our user-friendly MLA tool guides your employees - with and without (in-depth) prior knowledge of the topic - through the MLA-compliant auditing process and offers easy-to-implement assistance in fulfilling the requirements of the MLA by means of individualized operating and best-practice instructions: The audit steps, which are to be carried out completely digitally, meet the requirements for the necessary proof for authorities, among others, citing that the applicable due diligence obligations under the Money Laundering Act have been fulfilled. This includes:

    Audit and identification 

    • Contracting party/acting representative;
    • Beneficial owner(s): is the contracting party acting on behalf of a beneficial owner?;
    • Persons on embargo, sanctions and/or terrorism lists;
    • Politically exposed person (PeP);
    • Purpose of the business relationship: request for the information for the purpose of the (possible) business relationship.

    Documentation 
    The MLA tool enables comprehensive documentation of the audit steps taken to identify the contracting party, including the following:

    • the storage of the queries made and documentation of the individual processing steps,
    • the possibility to query and upload additional, individually definable documents/evidence (e.g. identification documents, commercial register documents),
    • individual or portfolio audits (both for future, potential and existing contractual relationships),
    • handling that (if required) is individually configurable, simple and user-friendly,
    • storage in compliance with data protection requirements.

    Are you interested in our digital MLA tool? Please feel free to contact us for a non-binding offer at info@winheller.com. We will support you in efficiently fulfilling all legal MLA obligations!

    Contact

    Contact

    Awards

    Juve AwardLegal 500 Germany 2019
    azur100: Top Employer for Lawyers 2021

    Newsletter

    Stay up to date with our quarterly German Business Law newsletter!

    Subscribe for free