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BaFin Interpretation and Application Guidance on German GwG (Money Laundering Act)

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The BaFin interpretation and application guidance provides detailed instructions and clarifications regarding the Suspicious Transaction Report (STR) procedure outlined in Section 43 of the GwG.

Principle

• Reporting transactions indicating money laundering, terrorist financing, or failure to disclose a beneficial owner is a core obligation under the GwG.
• Penalties for non-compliance include fines and, in some cases, criminal penalties.

Preconditions for Reporting

Applicability

• The obligation applies to all transactions, including non-cash, cash, and other asset transfers.
• No minimum threshold: reporting is required regardless of transaction size or asset value.
• Post-transaction discovery: reporting applies even if suspicious facts are discovered after a transaction is completed.
• Judgment and assessment: obliged entities must use their judgment and expertise to identify unusual or abnormal transactions within their professional context.

Margin of Judgment

• Obliged entities have limited discretion in determining what constitutes suspicious facts.

Reporting Obligation

• Independent reporting obligation: this applies when the contracting party fails to disclose whether they act for a beneficial owner.

Organisational Structure for Reporting

• Internal procedures: obliged entities must have internal mechanisms to register, forward, and report suspicious matters to the FIU.

Report Requirements

Submission

• Mandatory form: reports must be submitted electronically using the “goAML” system.
• Exceptional cases: alternative methods (fax, post) are allowed if electronic submission is disrupted.

Consequences of a Report

Transaction Postponement

• Transactions reported as suspicious can only proceed after clearance from the FIU or after a specified time has elapsed without objection.

Urgent Case Rule

• In cases where postponement is not possible, the transaction can proceed, but the report must be made immediately.

Forwarding of Information Concerning Reports

• Ban on tipping off: entities must not inform parties involved about the report or related investigations.
• Exceptions: sharing information is allowed under specific conditions, like within the same corporate group or with government bodies.

Termination of Business Relationships

Enhanced Due Diligence

• After a report, enhanced monitoring of the reported party is required.

Relationship Termination

• The decision to terminate a business relationship post-report is at the discretion of the obliged entity, but it should consider notifying the FIU and relevant authorities.