Germany Tightens Squeeze on Money Laundering Detection Methods for Goods Traders

In an effort to combat money laundering and terrorist financing, Germany has implemented stricter regulations for goods traders, requiring them to implement robust anti-money laundering (AML) measures.

Revised Money Laundering Act (AMLA)

The revised AMLA, enforced in 2017, imposes various obligations on goods traders. These include:

• Conducting a risk-based approach to prevent money laundering
• Establishing an effective AML-specific risk management system that includes:
  • Group-wide risk analysis
  • Internal security measures
  • Documented and regularly updated risk analysis
  • Internal safeguards (principles, procedures, controls)
  • Customer due diligence obligations
  • Internal whistleblowing system
  • Suspicious activity reporting
  • Employee training
  • Record-keeping

Obligations for Goods Traders

Under the new rules, goods traders must:

• Obtain and document extensive information internally about beneficial owners, including:
  • Type and scope of economic interests held by beneficial owners
  • This information must be kept up-to-date at all times and reported to the transparency register
• Conduct regular risk assessments and updates

Consequences of Non-Compliance

Failure to comply with these obligations can result in severe sanctions, including:

• Fines of up to €1 million or twice the economic benefit derived from the violation
• Public disclosure of the violation and the responsible person
• Reputation damage and business disruption

Increased Requirements

The requirements have increased further since January 2020, following the implementation of the 5th EU Money Laundering Directive. This particularly affects goods dealers and real estate agents.

Sanctions and Embargoes

Companies must assess, monitor, and manage legal risks arising from incorrect application of sanctions and embargoes, particularly in the EU and US.

Conclusion

Germany’s efforts to combat money laundering and terrorist financing demonstrate its commitment to maintaining a robust financial system and upholding international standards. Goods traders must remain vigilant and ensure compliance with these stringent requirements to avoid severe penalties.