German Anti-Money Laundering Authority Issues Guidance on Suspicious Transactions

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New Guidance Released by German Financial Supervisory Authority (BaFin)

The German Financial Supervisory Authority (BaFin) has released new guidance on Germany’s anti-money laundering laws, providing clarity on the reporting obligations of financial institutions and other entities. This guidance aims to help obliged entities comply with the country’s anti-money laundering regulations and prevent the misuse of financial systems for illicit activities.

Reporting Obligations

The guidance emphasizes that all transactions must be reported if they indicate money laundering, terrorist financing, or a failure by the contracting party to disclose beneficial ownership information. This includes:

Non-cash transfers (e.g., wire transfers, securities trades)
Cash transactions (e.g., cash deposits, withdrawals)
Other asset transfers (e.g., real estate, jewelry)

The reporting obligation applies even if the suspicious facts are discovered after a transaction has been completed.

Identifying Suspicious Transactions

Obliged entities must use their judgment and expertise to identify unusual or abnormal transactions within their professional context. While there is limited discretion in determining what constitutes suspicious facts, obliged entities are required to report any transactions that may be linked to money laundering or terrorist financing.

Reporting Requirements

Reports must be submitted electronically using the “goAML” system, unless electronic submission is disrupted. In such cases, alternative methods such as fax or post can be used.

The consequences of reporting a suspicious transaction are severe:

Transactions reported as suspicious cannot proceed until clearance is given by the Financial Intelligence Unit (FIU) or a specified time has elapsed without objection.
In urgent cases, the transaction may proceed, but the report must be made immediately.

The guidance emphasizes the importance of not tipping off parties involved in the reported transactions. Obliged entities are allowed to share information under specific conditions:

With law enforcement agencies
For purposes of preventing or detecting money laundering or terrorist financing

Internal Procedures and Enhanced Due Diligence

In addition to reporting obligations, the guidelines emphasize the need for obliged entities to maintain internal procedures for registering, forwarding, and reporting suspicious matters to the FIU. Enhanced due diligence measures must also be implemented after a report is made:

Monitoring of the reported party
Consideration of terminating the business relationship

Conclusion

The BaFin guidance aims to help financial institutions and other entities comply with Germany’s anti-money laundering laws and prevent the misuse of financial systems for illicit activities. By understanding the new guidelines, obliged entities can ensure they are meeting their reporting obligations and taking necessary steps to prevent money laundering and terrorist financing.