German Anti-Money Laundering Law: Obliged Entities’ Professional Activities

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Berlin, Germany - To combat money laundering and terrorist financing, German authorities have implemented stricter regulations on obliged entities operating in the country.

Data Processing Systems for Suspicious Transactions

According to Section 2 (1) nos. 10-14 and 16 of the law, companies are required to operate data processing systems that enable them to identify suspicious or unusual transactions related to:

Gambling operations
Customer accounts

These systems must be updated regularly and comply with publicly available information on money laundering and terrorist financing methods.

Employee Reporting Obligations

Obliged entities are expected to make arrangements for their employees to report any contraventions of anti-money laundering and counter-terrorism laws to the relevant authorities while maintaining confidentiality.

Companies are required to provide information to the German Financial Intelligence Unit (Zentralstelle für Finanztransaktionsuntersuchungen) or other competent authorities upon request, including:

Details about business relationships with specific individuals during a five-year period prior to the enquiry
Other relevant information deemed necessary by the authority

New Requirement for Money Laundering Reporting Officer

Section 7 of the law introduces the requirement for obliged entities under Section 2 (1) nos. 1-3, 6, 7, 9 and 15 to appoint a money laundering reporting officer at senior management level and a deputy. The reporting officer is responsible for ensuring compliance with anti-money laundering and counter-terrorism laws.

Supervisory Authority’s Role

The supervisory authority has been granted powers to:

Issue orders to obliged entities to implement necessary internal safeguards
Prohibit the engagement of third parties to implement internal safeguards if deemed necessary
Monitor compliance with regulations

Obliged entities are expected to notify the supervisory authority of any changes to their money laundering reporting officer or deputy and provide prior notification for any appointments. Failure to comply with these regulations may result in severe penalties.

Risk-Based Approach

The law allows for a risk-based approach to be taken by the supervisory authority when implementing anti-money laundering measures. This means that obliged entities that engage in high-risk transactions or operate large businesses may be required to implement additional safeguards to prevent money laundering and terrorist financing activities.

Conclusion

Germany’s new anti-money laundering law aims to strengthen its efforts against money laundering and terrorist financing by requiring obliged entities to take specific actions to identify and report suspicious transactions. The law also introduces the requirement for a money laundering reporting officer and grants the supervisory authority powers to issue orders and monitor compliance.