Germany Tightens Sanctions Screening Rules for Banks

Strengthening Anti-Money Laundering Efforts

The Financial Action Task Force (FATF) has updated its public statement on high-risk jurisdictions, reflecting the latest developments in global sanctions and anti-money laundering regulations. This update is now in effect, and Germany’s financial regulatory authority BaFin is urging banks to take immediate action to ensure compliance with the new rules.

Key Changes to Sanctions Screening Rules

• Banks operating in Germany must conduct thorough sanctions screening on all transactions as per EU law.
• The European Union’s Delegated Regulation 2016/1675 has been updated, setting out strict requirements for:
  • Customer identity verification
  • Transaction monitoring to prevent money laundering and terrorist financing
• Banks are advised to review and update their internal controls to reflect these changes.

Additional Guidance from Deutsche Bundesbank

• The Deutsche Bundesbank has updated its list of sanctioned entities on its website.
• Banks must regularly check this list to ensure they do not engage with individuals or organizations subject to sanctions.

Consequences of Non-Compliance

Failure to comply with the new rules could result in severe consequences for non-compliant institutions, including:

• Potential fines
• Reputational damage