.svg)
.svg)
June 9, 2023
8 min
.svg)
Money laundering is the smuggling of illegally generated funds into the legal financial and economic cycle. Money laundering is a criminal offense. Section 261 (1) of the German Criminal Code makes money laundering punishable by up to five years' imprisonment.Drug trafficking, prostitution, illegal gambling, arms trafficking and corruption represent the main fields of activity of organized crime. Criminals make large sums of "dirty money" from these activities. These are "laundered" through the crime of money laundering. For example, they are channelled through various accounts and companies.
The ultimate goal of money laundering is to make it impossible to identify where the money came from and to whom it actually belongs.
The money becomes available for use in normal economic transactions, such as the purchase of real estate or other goods. At the end of a "successful" money laundering operation, for example, it is impossible for anyone to see that the house in city A belongs to person XY and was financed with money from drug trafficking in city B. The money is then used to purchase real estate or other goods.
Terrorist financing is defined as the provision or collection of assets with the knowledge or intent that such assets will be used or intended to be used, in whole or in part, to finance terrorism. Business relationships and transactions conducted to commit terrorist financing are criminal offenses.
Money laundering is a cross-border, international phenomenon. The globalization of financial markets has made money laundering methods more complex. Tracking and containing illegal transactions is also more difficult. That is why cooperation with European and international partners is of central importance. On the one hand, this concerns cooperation in specific cross-border investigative procedures. On the other hand, it is important to create common standards for combating money laundering. Such standards have been established both at the EU level and worldwide by the Financial Action Task Force in Money Laundering.The AMLA is preventive in nature. It obliges certain groups of persons, such as financial service providers, to exercise special care and supervision. The aim is to identify suspected cases of money laundering as early as possible.
An important approach in the fight against money laundering is, for example, to prevent anonymous economic transactions. Therefore, banks and insurance companies, but also real estate agents, casinos and goods dealers are obliged to identify their business partners. They must report suspicious transactions or business relationships to the relevant authorities. Failure to comply with the GwG will result in fines. (Source: BMI)
There are concrete measures to combat money laundering among these groups of persons: Due diligence, documentation of buyers and sellers, up to risk management must be in place for various business transactions carried out. This depends on the sums of money involved and which business field or groups of persons are affected - whether real estate transactions, trading in precious metals, goods transactions with cash transactions above a threshold of 2,000 euros (precious metals) or 10,000 euros ( other goods), art dealers and brokers, auctioneers, gallery owners and art warehouse owners.
In general, due diligence obligations including documentation apply from 2,000 euros, and risk management must be in place from 10,000 euros. The obligation to report suspicious cases to the FIU (Financial Intelligence Unit) remains in place regardless of the payment type or amount.
Changes also exist with regard to the transparency register. The transparency register contains the names and other data of the respective business partners so that the transactions conducted are made transparent. The transparency register can be viewed by the public without there having to be a legitimate interest. Obligated parties must obtain proof of registration in the Transparency Register or an extract of the data accessible via the Transparency Register. The transparency register is used by obligated parties to identify the beneficial owner.
Obligated parties must therefore document their business partners and inspect the transparency register for control purposes. If you find discrepancies with the data in the transparency register, you must report them to the entity keeping the register.Obliged entities that are parent companies of a group must carry out a risk analysis for all branches, subsidiaries and group companies as defined in section 1 (16) numbers 2 to 4 that are subject to obligations under money laundering law. The group-wide obligations now also apply to obliged entities that are themselves merely group-affiliated entities, but which at the same time have at least one other group-affiliated entity downstream of them that is subject to their controlling influence, and whose parent company is not required to take group-wide measures either under the AMLA or under the law of the state in which it is domiciled.The new AMLA has been in force since January 1, 2020. In it, the term "financial company" is redefined.
Holding companies that exclusively hold investments in companies outside the credit institution, financial institution and insurance sector and that do not engage in entrepreneurial activities beyond the tasks associated with the management of the investment holdings are not financial companies within the meaning of the AMLA.
The general fine offence under Section 56 of the German Banking Act has been expanded and reorganized. Fines can therefore be expected in more cases.
With the new Money Laundering Act
In addition, digital companies will be required to provide payment service providers with access to infrastructure services. These include, for example, interfaces for near field communication (NFC), which is required for cashless payments with cell phones at physical points of sale . Payment service providers should thus be able to better document payments made.Generally, there are new group-wide obligations of a group of companies within the meaning of the GwG.
There are new regulations on the processing of personal data by obligated parties as well as by supervisory authorities, and there are new provisions on reporting discrepancies to the register-keeping body. There are regulations on retrieval by the Central Financial Transaction Investigation Authority and law enforcement authorities. There is also a long list of politically exposed persons as defined by the AMLA, such as heads of state, ministers, members of the governing bodies of banks and many more. The exact and entire changes, as described here, are listed in the Act Implementing the Amending Directive to the Fifth EU Money Laundering Directive (Bundesfinanzministerium.de). SECJUR's experts are familiar with the details and can advise you on what you now need to consider and implement in order to effectively comply with the AMLA.
- Effectively combating money laundering and terrorist financing
- Strengthening confidence in the financial sector and protecting the economy
- Prevention of terrorist financing
- Allows to serve trustworthy customers in new markets (foreign countries) with strict controls on the business activities carried out
- Strict controls protect corporate reputation
- Identify and monitor customers (KYC - Know Your Customer) and transactions.
- Establishment of internal control systems
- Training of employees in dealing with suspected money laundering cases.
There are different approaches, depending on company size and industry. According to the new AMLA, documentation up to and including implementation of risk management in affected companies is a legal obligation in various cases. There is a transparency register that anyone can view publicly. The GwG states that obligated parties subject to due diligence must document their business relationships here and check whether the entries are correct - discrepancies must be reported. Obligated parties pursuant to Section 2 (1) GwG must register electronically with the FIU. Overall, the necessary risk management includes a risk analysis, internal security measures, an anti-money laundering officer, compliance with record-keeping and retention requirements, and group-wide obligations for corporate groups.
To combat money laundering, it may be necessary to cooperate with external consultants and authorities, but it is noticeable that external consultants are usually expensive. SECJUR's Anti-Money-Laundering (AML) platform is more cost-efficient and time-saving than an internal, manual and lengthy risk management set-up. secjur's AML platform automates transaction checks and KYC (Know Your Customer), automatically generates risk analyses and reporting, and a dedicated money laundering officer provides support in case of questions or suspicions. This is cheaper overall than other external consultants due to automation.
The advantages of such a system are: There is an early warning system, loss reduction, increased transparency and integrity. There is a cost saving as well as a time saving, because nerve-racking and time-consuming manual checks are no longer necessary. SECJUR's experts are familiar with the details of the AMLA. So you do not have to be afraid of fines due to non-compliance with the AMLA. SECJUR's experts will advise you on new regulations and suspicious cases. In addition, the principle of SECJUR is scalable: The implementation grows with the needs of the company.
The benefits of the Anti-Money Laundering Act (AMLA) include an effective fight against money laundering and terrorist financing, strengthening confidence in the financial sector, and protecting the economy. Additionally, it helps prevent terrorist financing, provides more control and reputation for companies.
Implementing AMLA-compliant systems in businesses brings various advantages. It reduces risks associated with money laundering, enhances reputation, improves control over financial activities, and increases security measures.
Whether you are an obligated party according to Section 2 of the AMLA and whether you have to comply with due diligence obligations or even set up a risk management system in your company according to the new AMLA, you can find out when consulting SECJUR. Learn how the compliance platform - SECJUR's automated anti-money laundering (AML) platform - can effectively and cost-efficiently help you set up and operate a risk management system in line with the AMLA.
SECJUR stands for a world where companies are always compliant, but never have to think about compliance. With the Digital Compliance Office, companies automate time-consuming work steps and achieve compliance standards such as GDPR, ISO 27001 or TISAX® up to 50% faster.
Automate and streamline your compliance processes with our Digital Compliance Office
Everything you need to know about the product and billing.
