Germany Tightens Screws on Money Laundering Prevention for Goods Traders

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The revised Money Laundering Act (AMLA) has brought about significant changes for goods traders since its implementation in 2017. Despite being granted relief from reporting cash transactions over €10,000, companies are still required to thoroughly examine their exposure to individual aspects of the AMLA.

Obligated Parties under the Law

Goods traders are considered obligated parties under the law and must adhere to exemption regulations. This means that they must implement an effective system for managing risks related to money laundering, including:

• Group-wide risk analysis
• Internal security measures
• Documentation, regularly updated, and made available to supervisory authorities

Risk-Based Approach

A risk-based approach has taken center stage in money laundering prevention. Obligated persons must:

• Implement internal safeguards, including principles, procedures, and controls for dealing with risks
• Conduct customer due diligence obligations
• Establish an internal whistleblowing system
• Report suspicious activity
• Provide employee training and reliability checks
• Maintain record-keeping and retention obligations

Documenting Beneficial Owners’ Economic Interests

Companies are also required to maintain extensive documentation internally, including information on beneficial owners’ economic interests. This information must be kept up-to-date and reported to the transparency register.

Consequences of Non-Compliance

Failure to comply with these obligations can result in severe penalties for goods traders, 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
• Devastating effects on reputation and business

Increased Requirements since January 2020

The requirements for money laundering-related risk management have increased again since January 2020, particularly for goods dealers and real estate agents, due to the 5th EU Money Laundering Directive.

Sanctions and Embargoes

Sanctions and embargoes are closely linked to money laundering and terrorist financing. Recent developments in global conflicts make this topic increasingly relevant. Companies with international purchasing and sales markets face numerous challenges due to constant changes in sanctions and embargoes. It is essential for companies to:

• Assess, monitor, and manage legal risks through a functioning governance system
• Monitor EU and US contexts closely

By understanding these new regulations and requirements, goods traders can ensure compliance and minimize the risk of severe penalties.