German Companies Must Implement Strong Anti-Money Laundering Measures

Berlin - In an effort to combat money laundering and terrorist financing, German companies are now required to implement robust anti-money laundering measures.

Key Requirements

According to new regulations, obliged entities under Section 2 (1) nos. 10 to 14 and 16 must perform their professional activities as employees of a company, with the obligations falling on the company. Some of the key requirements include:

• Operating data processing systems that enable them to identify suspicious or unusual transactions in gambling operations and via a gambling account.
• Making arrangements for employees to report contraventions of anti-money laundering and counter-terrorist financing law provisions to appropriate bodies while ensuring confidentiality.
• Ensuring they are in a position to provide information to the German Financial Intelligence Unit (Zentralstelle für Finanztransaktionsuntersuchungen) or other competent authorities upon request.

Third Party Engagement

Companies may engage third parties to implement internal safeguards, but must notify the supervisory authority in advance and demonstrate that the criteria for prohibiting such transfers are not fulfilled. The ultimate responsibility for implementing safeguards remains with the company.

Supervisory Authority Powers

The supervisory authority has the power to:

• Issue orders to individual companies to implement necessary internal safeguards in individual cases.
• Require companies to apply anti-money laundering measures proportionate to the level of risk, taking into account the kind of transactions they engage in or the size of their business.

Money Laundering Reporting Officer

Obligated entities under Section 2 (1) nos. 1 to 3, 6, 7, 9 and 15 are required to appoint a money laundering reporting officer at senior management level and a deputy. This officer is responsible for compliance with anti-money laundering and counter-terrorist financing law provisions and must be directly subordinate to the top management level.

Exemptions

The supervisory authority may exempt companies from this obligation if it determines that there is no risk of information loss or deficits, or if other provisions are made to prevent money laundering and terrorist financing. However, in some cases, the supervisory authority may order companies under Section 2 (1) nos. 4, 5, 8, 10 to 14 and 16 to appoint a money laundering reporting officer.

Conclusion

Overall, these new regulations aim to strengthen Germany’s efforts to combat money laundering and terrorist financing, and to ensure that companies play a key role in this effort.