Obligations under the Anti-Money Laundering Act for obliged entities in the non-financial sector (excluding organizers and intermediaries of gambling pursuant to Section 2 (1) no. 15 of the Anti-Money Laundering Act [GwG])

Entrepreneurs and business operators can be exploited for money laundering or terrorist financing by unscrupulous customers. Therefore, the Money Laundering Act provides for measures in certain industries and professional groups to protect against such abuse. It is important for both these "obligated entities" under the Money Laundering Act and their customers to know what preventive actions the law requires of businesses and how customers are expected to support businesses in this regard.

Money laundering is the integration of illegally obtained funds into the legal financial and economic cycle. Money laundering is a criminal offense. Section 261 (1) of the Criminal Code (StGB) punishes money laundering with a prison sentence of up to five years.

Terrorist financing is the provision or collection of assets to finance terrorist activities, as well as corresponding support activities in this regard (Section 89c of the German Criminal Code).

To prevent abuse for these purposes, as an obligated entity under the AMLA you must implement security measures both for your principal place of business in Hesse and for any branches or subsidiaries in other federal states, and observe due diligence obligations when dealing with your business partners. The regional administrative authorities (Regierungspräsidien) are responsible for supervising the following industries and professions:

• financial institution pursuant to section 1 paragraph 24 of the German Money Laundering Act
  (e.g., investment companies, private equity firms, financial investment brokers and fee-based financial investment advisors, M&A advisors—in each case, provided certain additional conditions are met),
• Insurance intermediaries pursuant to Section 59 of the Insurance Contract Act (excluding product-accessory intermediaries and tied insurance intermediaries who do not require a commercial trade license) and only to the extent that they broker life insurance or accident insurance with premium refund, grant certain loans, or offer capitalization products
• Legal counsel (not members of a bar association) as well as registered persons pursuant to Section 10 of the Legal Services Act (if they assist their clients in the planning or execution of certain transactions),
• Service providers for companies and trusts or trustees (e.g. management consultants, shelf company providers and similar professional groups providing services to third parties),
• real estate agents (in the brokering of purchase properties and rental or lease properties with a monthly basic rent/lease of 10,000 euros or more) and
• Commodity dealers (persons who trade commercially in goods), art intermediaries, and art warehouse keepers, provided that the warehousing takes place in duty-free zones. Many of the obligations only apply to transactions above a certain amount and, in some cases, only to cash payments.

If you are one of these obliged entities, you must take the measures necessary for your protection in a risk-based manner, to the extent provided for by the Money Laundering Act (GwG).

The obliged entities must know their customers, monitor business relationships and transactions for anomalies, implement internal security measures appropriate to the risk, and document all necessary data and essential measures. Through an individual analysis, the risks typical for their business activity and business partners are to be identified in order to prevent abuse for money laundering and terrorist financing purposes. In addition, they must report suspicious cases to the Financial Intelligence Unit (FIU) via the GoAML reporting portal.

Notification of the appointment/dismissal of a (group) AML officer:
The appointment or dismissal of a (group) AML officer, including their deputy, is subject to a notification requirement to the supervisory authority. As a rule, this must be done in advance. Under the German Money Laundering Act (GwG), only financial enterprises and obligated entities that are parent companies of a group and therefore required to appoint a group AML officer are obligated to appoint AML officers. In addition, traders in high-value goods and art intermediaries must appoint AML officers and a deputy provided they meet the requirements of the general administrative decree of the regional administrative authorities.

Outsourcing notices and exemption applications:
Depending on the scope of the submitted or reviewed documents and the complexity of the companies involved, a longer processing time must be expected.
Registration requirement with the FIU
No later than January 1, 2024, all obliged entities under the Anti-Money Laundering Act must have registered electronically with the Financial Intelligence Unit (FIU).

Registration requirement in the transparency register
Starting in August 2021, all companies subject to registration must actively enter their beneficial owners into the Transparency Register – the notification fiction no longer applies. For registered associations pursuant to Section 21 of the German Civil Code, the notification requirement generally does not apply (Section 20a of the German Money Laundering Act [GwG]).

The supervisory authorities can levy administrative costs for individual official acts in accordance with the Administrative Costs Ordinance for the Area of Responsibility of the Ministry of the Interior and for Sport (VwKostO-MdIS) of December 11, 2018, as amended. The amount of the costs depends on the time spent.