How can money laundering be prevented

Money Laundering Act - Obligations for companies to act

Money laundering is the concealment of the true origin of illegally generated income from organized crime. The law on tracing profits from serious crimes (Money Laundering Act - GwG) is intended to prevent money laundering and terrorist financing.

 

In order to achieve these goals, the law makes certain companies and individuals particularly responsible. In Section 2 of the GwG, the addressees of the law are finally listed and are called "obligated parties". Recent changes to the AMLA have expanded this group to include financial and fee investment brokers, rental brokers, providers of electronic wallets and cryptocurrencies, as well as art brokers and stockholders, including art galleries and auction houses.

 

Affected entrepreneurs are well advised to deal with the money laundering regulations and to check to what extent they are covered by the regulations, which obligations they have to observe in business dealings with their customers and which penalties threaten if they are not observed.

 

One of the essential components of the AMLA is the independent electronic transparency register. This provides for the compulsory publication of all beneficial owners of companies as well as corresponding notification obligations of those affected. An obligation to register potentially applies to all legal entities under private law (GmbH, AG, foundations, associations) as well as registered partnerships (e.g. OHG, KG, GmbH & Co. KG), even if they are not obliged to do so acts within the meaning of Section 2 of the GwG. The Federal Office of Administration can impose fines of 100,000 euros for violations of the transparency obligations. Serious violations can result in fines of up to one million euros, in special cases even up to five million euros. Companies should therefore check whether there is an obligation to notify the transparency register due to the specific corporate law relationships.

 

Important NOTE: Recently, the Federal Office of Administration has been carrying out an increasing number of administrative offense proceedings against companies that do not meet their reporting obligations. GmbHs whose registration was before 2007 and which have not changed their list of shareholders since 2007 are particularly affected. The aforementioned companies do not benefit from the fictional effect in Section 20 of the GwG because of their old, not yet electronically retrievable shareholder lists. They are not obliged to update their list of shareholders, but because they cannot be accessed electronically in the transparency register as a so-called downstream register, they must disclose the beneficial owners.

 


Supervisory authority


The regional councils in Hesse are responsible for overseeing those obliged to operate in the non-financial sector. The Darmstadt regional council offers those obliged from the Frankfurt Chamber of Commerce and Industry a variety of information, leaflets and notification forms on its website. You will also find basic information as well as design and application instructions specifically for goods dealers, real estate agents and other non-financial companies published there. Proper money laundering compliance includes risk management that includes a risk analysis and internal security measures. In addition to a leaflet, the supervisory authority has created a supporting handout in the form of a checklist and a schematic representation of the risk management requirements.