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Germany Cracks Down on Financial Crime: Best Practices for Prevention
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Germany has intensified its efforts to prevent financial crime, including money laundering and terrorist financing, to maintain its attractiveness as a business location. Private-law actors in the financial and non-financial sectors are playing a crucial role alongside state supervisory and law enforcement authorities.
New Regulations and Extensions
The European Commission has published a comprehensive package of measures aimed at combating money laundering and terrorist financing. The proposed EU Money Laundering Regulation aims to ensure uniform implementation of anti-money laundering measures across the EU, while the 6th EU Money Laundering Directive sets out requirements for national risk analyses and register obligations.
Obligations for Companies
Until these regulations come into force, companies must continue to comply with the provisions of Germany’s Money Laundering Act. This includes:
- Conducting a money laundering-related risk analysis according to their individual risk profile
- Implementing appropriate safeguards such as due diligence obligations with regard to business partners and reporting suspicious cases
Consequences for Non-Compliance
Failure to comply with these regulations can result in fines. Companies must ensure that they have effective preventive mechanisms in place, as non-compliance can already lead to the imposition of a fine under the Money Laundering Act.
Transparency Register Becomes More Comprehensive
In addition to the Money Laundering Act, Germany’s Transparency Register and Financial Information Act pose challenges for companies. With the conversion of the transparency register from a catch-all to a full register, all legal entities under private law and registered partnerships must:
- Identify their beneficial owners
- Actively report this information to the registry
Sanctions and Embargoes
Closely related to money laundering and terrorist financing are the challenges posed by sanctions and embargoes. Companies with an international purchasing and/or sales market must be aware of constant changes to these regulations and ensure that they comply with them in order to avoid legal risks.
Our Services
To support companies in meeting these diverse challenges, our services include:
- Prevention: status checks, gap analyses, risk assessments, and more
- Clarification and processing of suspicious circumstances: forensic investigations, look-back analyses, and reporting to the transparency register
- Consultation and examination: compliance with legal requirements, regulatory audits, and corporate monitorships
By implementing these best practices for preventing financial crime, companies can ensure their compliance with German law and regulations while also protecting themselves against the risks associated with money laundering, terrorist financing, and sanctions violations.