What has happened?
In January 2020, the 5th EU Money Laundering Directive (EU 2018/843) was enacted which increased the auditing and due diligence requirements for non-financial sectors. As a result, Germany has adapted its money laundering legislation accordingly.
The highlight in the Money Laundering Act: all transactions must be reported if money laundering or terrorist financing is suspected.
The German National Risk Analysis of combating money laundering and terrorist financing must be supported by the obligated parties of the Money Laundering Act. The findings must be recognized when drawing up their own risk analysis (§ 5 Abs. 1 Satz 2 GWG).
The German regulators targeted the non-financial sector in this law and Bafin published an interesting conclusion last October:
Who is affected?
In detail, the following industries and sectors are affected by the extension of the scope of the AMLD amendment:
CRYPTOCURRENCY – Exchanges and Wallet providers
BANKING – Pre-Paid Service Providers
REAL ESTATE- Real Estate Industry
AUCTIONEERS / GOLD / ART DEALERS
Since 2020 the exchange of information is granted between the authorities responsible for money laundering and solvency supervision, including the European Central Bank.
In addition, access to the so-called transparency register of legal entities and other companies, which contains information on the beneficial owner, must in future be publicly accessible. However, this does not apply to certain types of trust or special cases.
The wider customer-related duties of care are basically triggered by the following events:
In summary, the strengthened due diligence obligations are mandatory for increased transaction partners with increased risks, such as politically exposed persons (PEPs), high-risk third countries or unclear economic beneficiaries.
As a conclusion, an increase in AML screening needs is expected for nonfinancial sectors. This trend is reflected in Q1 2020 already. The luxury watch and art segment or luxury car dealer seem to enter conversations with screening data providers for the first time. It seems that on-premise AML screening could be an additional tool to obligated parties of the Money Laundering Act when drawing up their own risk analysis.
Some common challenges for the non-financial sector are for example:
Overall it may be said that anti-money laundering commissioner´s role might change in the future. This is not only true because of the current challenges triggered by the 5th EU Money Laundering Directive.
Another proposal for a law in Germany is the “Verbandssanktionengesetz “which will factor in whether a compliance–management–system is in place when determining the size of fines.
In conclusion, the role of an anti-money officer becomes more than just implementing a set of rules but becomes more of a corporate culture change agent.
The author disclaims any and all liability arising from the use of this document and does not guarantee that any information contained herein is accurate or complete. The opinions expressed in this publication are those of the authors. They do not purport to reflect the opinions or views of the employer.
Cmp.: N.A., Bundesministerium der Finanzen Referat L C 3 Öffentlichkeitsarbeit (10/2019) Erste Nationale Risikoanalyse Bekämpfung von Geldwäsche und Terrorismusfinanzierung 2018/2019. Online access Feb. 22nd 2020 https://www.bundesfinanzministerium.de/Content/DE/Downloads/Broschueren_Bestellservice/2019-10-19-erste-nationale-risikoanalyse_2018-2019.pdf?__blob=publicationFile&v=7
Cmp.: N.A., Caution x6 – In what areas are the financial sector and the non-financial sector vulnerable to money laundering and terrorist financing? BaFin presents six risk areas. (10/2019) Online access Feb. 22nd 2020 https://www.bafin.de/SharedDocs/Veroeffentlichungen/EN/Fachartikel/2019/fa_191021_NRA_en.html
Cmp.: B.Scheben, KPMG (Jan 2020) Das „Gesetz zur Umsetzung der Änderungsrichtlinie zur Vierten EU-Geldwäscherichtlinie“ ist in Kraft getreten. Online access Feb. 21st 2020 https://home.kpmg/de/de/home/themen/2019/05/neues-geldwaeschegesetz-zum-1-januar-2020.html
Cmp.: D.Zwink, Betriebsrat.de (N.A.) Entwurf des Verbandssanktionengesetzes (VerSanG-RefE) führt zu erheblichem Bedeutungsgewinn von Compliance. Online access Feb. 20st 2020 https://www.betriebsrat.de/arbeitnehmervertreter-im-aufsichtsrat/regeln-und-gesetze/verbandssanktionengesetz-staerkt-compliance-in-unternehmen.html
Cmp. Reuters Pictures (2010 – 2020) various
 Cmp.: Bafin (10/2019)