Germany Takes Tough Stance Against Financial Crime: New Banking Regulations Introduced
Introducing the Combating Financial Crimes Act (FKBG)
Germany has been grappling with the challenges of financial crime, including money laundering and sanctions evasion. To combat these offenses, Germany has introduced new banking regulations aimed at strengthening its fight against financial crime.
The latest development comes in the form of the Combating Financial Crimes Act (Finanzkriminalitätsbekämpfungsgesetz – FKBG), which was passed by the Federal Cabinet earlier this month. The act is part of a broader reform of German authorities aimed at strengthening the fight against financial crime, particularly money laundering and sanctions evasion.
Key Reforms under the Combating Financial Crimes Act
- Establishment of the Federal Financial Crime Agency (BBF): The agency will be responsible for investigating, analyzing, and supervising money laundering cases. It will also have a unit dedicated to implementing sanctions.
- Risk-based approach: Authorities can initiate investigations based on financial flows without relying on predicate offenses.
- State-of-the-art technologies: Investigative and analytical units will use the latest technologies for more effective investigation and analysis.
- Transparency registers: Better transparency registers with additional access authorizations will be implemented. Companies are encouraged to disclose their ownership and control structures in the transparency register.
Preparing for Dawn Raids
Recent events have shown that export control and sanctions are developing rapidly, especially in cases involving Russia. Companies should adjust their export control systems according to these new requirements. In preparation for dawn raids, companies should:
- Do not obstruct: Refrain from interfering with the investigation.
- Only exert influence verbally: Communicate with inspectors only through verbal means.
- Accompany and document actions: Ensure that company representatives accompany inspectors and document their actions.
- Reserve rights over documents: Companies should reserve their right to access or review documents that may be subject to legal privilege or outside the scope of the warrant.
- Request sealing of documents: Request that sensitive documents be sealed to prevent unauthorized access.
Next Steps
The Hogan Lovells Investigations and Compliance team and the Export Controls and Sanctions team are available to assist companies facing inspections or investigations on alleged sanctions or anti-money laundering rules breaches. We also provide anti-money laundering and sanctions training. If you have any questions, please reach out to our contacts listed above.
Authored by Stefan Kirwitzke and Michael Jahn