Supervisors Urge Financial Institutions to Strengthen Internal Safeguards Against Money Laundering
Berlin, Germany
The German financial regulatory authorities have issued a stern warning to obliged entities under anti-money laundering (AML) and counter-terrorist financing (CTF) law to strengthen their internal safeguards against money laundering and terrorist financing.
Strengthening Internal Safeguards
According to the latest guidelines, obliged entities must ensure that they:
- Have developed and implemented effective internal principles, procedures, and controls to prevent and detect AML/CTF activities
- Appoint a money laundering reporting officer and deputy
- Implement risk-based customer due diligence measures
- Provide initial and ongoing training for employees
Regular Monitoring and Updates
The supervisory authority has emphasized the importance of regular monitoring and updating of these safeguards to ensure that they remain effective in combating AML/CTF risks. Obliged entities must:
- Operate data processing systems that enable them to identify suspicious transactions in gambling operations and via gambling accounts
- Make arrangements for their employees to report contraventions of AML/CTF provisions confidentially
Providing Information to Authorities
Obliged entities must be prepared to provide information to the German Financial Intelligence Unit (Zentralstelle für Finanztransaktionsuntersuchungen) or other competent authorities upon request, regarding business relationships and transactions with certain individuals.
Ultimate Responsibility
The supervisory authority has also emphasized that the ultimate responsibility for implementing these safeguards lies with the obliged entities.
Engaging Third-Party Service Providers
Obliged entities are allowed to engage third-party service providers to implement internal safeguards, provided they:
- Notify the supervisory authority in advance
- Demonstrate that the criteria for prohibiting such transfers are not fulfilled
Commitment to AML/CTF Compliance
The German Financial Regulatory Authority (BaFin) has reiterated its commitment to ensuring that financial institutions adhere to the highest standards of AML/CTF compliance, and warned that any failures to do so will be met with swift action.
“We expect all obliged entities under our supervision to take their AML/CTF obligations seriously and to implement effective internal safeguards to prevent and detect money laundering and terrorist financing,” said a BaFin spokesperson.
Conclusion
The new guidelines are designed to strengthen the country’s efforts against money laundering and terrorist financing, and to ensure that financial institutions play their part in protecting the integrity of the financial system.