Financial Crime World

Title: BaFin’s Zero-Tolerance Policy against Money Laundering and Criminal Activities in the German Finance Sector

BaFin’s Role in Combating Money Laundering and Criminal Offenses

  • The German Federal Financial Supervisory Authority (BaFin) leads the fight against money laundering, terrorist financing, and other criminal offenses in the German financial sector.
  • BaFin enforces regulations under the Money Laundering Act (Geldwäschegesetz – GwG), Banking Act (Kreditwesengesetz – KWG), Insurance Supervision Act (Versicherungsaufsichtsgesetz – VAG), Payment Services Supervision Act (Zahlungsdiensteaufsichtsgesetz – ZAG), and Investment Code (Kapitalanlagegesetzbuch – KAGB).
  • Obliged parties include credit institutions, financial services institutions, payment institutions, life insurance undertakings, German asset management companies, and those selling or converting e-money.

Department for the Prevention of Money Laundering

  • Consolidated all responsibilities related to preventing money laundering under one department in 2003.
  • Supervises all financial institutions, companies, and persons mentioned under section 50 of the GwG.
  • Supervises efforts to prevent other criminal offenses outlined in section 25h of the KWG.

Emphasizing Transparency and Risk-Management

  • Ensuring transparency in business relationships and transactions is key.
  • Obliged parties must adhere to risk management processes.
  • Risk assessment and analysis, as well as internal risk measures for individual business types and clientele.

Customer Due Diligence and Continuous Monitoring

  • Strict due diligence when onboarding new customers.
  • Identify customer, beneficial owners, potential politically exposed persons, and assess risk of transaction.
  • Continuously monitor existing relationships and transactions for suspicious activities.

Simplified and Enhanced Due Diligence Measures

  • Obliged parties may use simplified due diligence measures for low-risk scenarios.
  • Enhanced due diligence measures for high-risk scenarios based on GwG’s risk factors.

Electronic Account Retrieval System (EARS)

  • Administers EARS – a tool for identifying accounts belonging to suspected terrorists and criminals in Germany.
  • Law enforcement agencies use this information for further investigations and potential account closure.

International Cooperation

  • Represents Germany in influential international and European bodies, such as FATF and AMLC.
  • Promotes best practices and strengthens global efforts against money laundering and other financial crimes.