Money Laundering: A Global Economic Threat with Local Consequences

• Money laundering is a clandestine process used to disguise the origins of illicitly gained profits
• In Germany, it’s a matter of criminal activity, economic consequences, and reputational damage
• § 261 of the German Penal Code criminalizes money laundering
• German law enforcement agencies handle investigations: Public Prosecution Department and State Offices of Criminal Investigations (LKA)

Money laundering harms the economy, particularly medium-sized businesses

Stricter Money Laundering Prevention Measures

• Prevention aims to conceal illegal income in the first place
• Protecting businesses from being used in money laundering schemes is essential
• Economic implications: integrity and stability

Money Laundering Prevention in Germany: The Money Laundering Act (Geldwäschegesetz, GwG)

GwG requirements apply to obliged entities in financial and non-financial sectors

KYC (Know Your Customer) Principles

• Identify customers and motivations behind transactions
• Apply to professionals including banks, insurance companies, and tax consultants

Responsibilities of Obliged Entities

• Implement risk management systems (§ 4 et seq. GwG)
• Follow customer due diligence guidelines (§ 10 et seq. GWG)
• Report suspected transactions (§ 43 et seq. GwG)

Transparency Register

• Certain companies and legal forms must declare beneficial owners
• Federal agencies administer the register regardless of GwG obligations

BaFin: The Competent Supervisory Authority

• BaFin ensures obligations to GwG are met
• Conducts checks (with and without cause) for compliance
• Imposes fines for violations (§ 56 GwG)

Administrative offenses lead to potential fines for non-compliance

Conclusion

• Informed German businesses contribute to the long-term success and stability of the national economy