German Geldwäschegesetz (GwG) Suspicious Transaction Report Procedure

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Principle

Reporting transactions indicating money laundering, terrorist financing, or failure to disclose a beneficial owner is a core obligation under the GwG.

Key Obligations and Penalties

• Reporting suspicious transactions is mandatory.
• Failure to report can result in fines and, in some cases, criminal penalties.

Preconditions for Reporting

The reporting obligation applies to all transactions, regardless of size or asset value.

Transaction Types Covered

• Non-cash transactions (e.g., wire transfers)
• Cash transactions
• Other asset transfers

Post-Transaction Discovery

Reporting is required even if suspicious facts are discovered after a transaction is completed.

Judgment and Assessment

Obliged entities must use their expertise to identify unusual or abnormal transactions within their professional context.

Limited Discretion

Entities have limited discretion in determining what constitutes suspicious facts.

Reporting Obligation

There’s an independent reporting obligation when the contracting party fails to disclose whether they act for a beneficial owner.

Organisational Structure for Reporting

Obliged entities must have internal mechanisms to register, forward, and report suspicious matters to the FIU (Financial Intelligence Unit).

Internal Mechanisms

• Registration of suspicious transactions
• Forwarding of reports to the FIU
• Electronic reporting using the “goAML” system (alternative methods allowed if electronic submission is disrupted)

Consequences of a Report

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

Entities must not inform parties involved about the report or related investigations (ban on tipping off).

Exceptions

• Informing within the same corporate group
• Notifying government bodies under specific conditions

Termination of Business Relationships

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

Decision to Terminate

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.