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German Companies Face New Anti-Money Laundering Requirements

As of January 1, 2023, German companies listed on the stock exchange will face new anti-money laundering (AML) requirements under the revised Act to Combat Money Laundering and Terrorist Financing (Geldwäschegesetz). The changes aim to enhance transparency and prevent financial crimes.

Uncertainty Surrounds Determination of Beneficial Owners

One of the key concerns is how to determine beneficial owners of companies listed on the stock exchange. While the AML Act provides a general clause for non-listed companies, it does not explicitly apply to listed companies. The Financial Committee (Finanzausschuss) recommended excluding listed companies from the provision due to concerns about European law.

• Companies must closely monitor the development of administrative practice by anti-money laundering supervisory authorities to ensure timely compliance with notification requirements.
• Uncertainty surrounds the determination of beneficial owners and the threshold required to trigger notification obligations.

Automated Access to Transparency Register

The new AML Act also provides automated access to the German transparency register for certain authorities, such as supervisory bodies and financial institutions, effective January 1, 2023. This will enable them to inspect and update information on beneficial owners in a more efficient manner.

Increased Notification Obligations

The revised AML Act expands notification requirements for companies. All nationalities of beneficial owners must be notified, in addition to existing information such as: * Name * Date of birth * Place of residence * Type and scope of economic interest

• Companies whose beneficial owners are already registered do not need to update missing information until they update their register on a regular basis.

Implications for Companies

Companies subject to AML requirements must consider the increased effort required for: * Initial notifications * Regular reviews of transparency register accounts * Timely implementation of required updates in case of personnel changes at management level

• EU-wide operating groups are advised to define uniform standards for determining beneficial owners and conduct central examinations of notification obligations.
• Violations of notification obligations can result in severe fines, making it essential for companies to take precautions to ensure compliance with the new requirements before transitional periods expire.

Conclusion

The revised AML Act aims to enhance transparency and prevent financial crimes. Companies must adapt to the new requirements by determining beneficial owners, notifying changes, and maintaining accurate records. Failure to comply may result in severe consequences.