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Germany money laundering and the AML Act

AML Compliance Knowledge & Training

Germany is the European Union’s largest economy and attracts wealth and investment interests from around the world. Unfortunately, as a business hub, Germany is also a popular target for criminals who seek to exploit its financial system to launder illegal money or financing terrorist activities. The fight against money laundering in Germany has become a priority for government and law enforcement authorities: research suggests that around €100 billion is laundered in Germany every year, with a record-breaking spike of almost 115,000 suspected German money laundering cases in 2019 – a jump almost 50% from the previous year. 

To address the threat posed by Germany money laundering, authorities have introduced a range of strict anti-money laundering regulations, tightening internal laws and implementing AML/CFT legislation mandated by the EU. Accordingly, banks, financial institutions, and other financial service providers must understand their obligations under AML/CFT law in Germany and how to ensure ongoing compliance.

What is BaFin?

Germany’s primary financial regulator is the Federal Financial Services Authority (BaFin). Under the authority of the Federal Ministry of Finance, Bafin works to ensure that banks and financial institutions comply with Germany’s AML/CFT regulations. Bafin is also responsible for issuing operational licenses, and conducting investigations when compliance violations are found. Bafin also plays a part in international financial regulation, working with organizations such as the Financial Action Task Force (FATF) and the Basel Committee on Banking Supervision (BCBS) to promote international AML/CFT standards.

German anti-money laundering acts

The German Anti-Money Laundering Act, known in Germany as Geldwäschegesetz (GWG) is Germany’s main anti-money laundering regulation. GWG codifies the relevant legal requirements for AML compliance in Germany, and sets out the following important information

As a member of the EU, Germany must implement the European Parliament’s Anti-Money Laundering Directives (AMLD). In October 2020, the German government passed the Draft Act for the Effective Prosecution of Money Laundering (Gesetz zur Verbesserung der strafrechtlichen Bekämpfung der Geldwäsche) in order to implement the regulatory changes mandated by the Sixth Anti-Money Laundering Directive. The key highlights of 6AMLD include the harmonization of money laundering predicate offenses, an expansion of the scope of the money laundering offence, an expansion of criminal liability to legal persons, and tougher punishments.  

Germany’s Money Laundering Draft Act goes beyond the AML/CFT requirements mandated by 6AMLD by removing the concept of ‘predicate offenses’ and instead designates any profits derived from any type of criminal activity under the scope of the money laundering offense. 

Germany money laundering regulations: How to comply

Following FATF recommendations, BaFin requires firms in Germany to implement risk-based compliance programs, deploying an AML/CFT response proportional to the level of risk they face. In practice, this means that firms operating in Germany must conduct risk assessments of their customers in order to build a risk profile, and implement the following AML measures and controls: 

Adverse media: News stories can be good indicators that customers are involved in financial crime: With that in mind, firms in Germany should monitor for adverse media that involves their customers by checking screen, print, and online news sources. 

Germany money laundering compliance

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Originally published 27 July 2021, updated 10 June 2024

Disclaimer: This is for general information only. The information presented does not constitute legal advice. ComplyAdvantage accepts no responsibility for any information contained herein and disclaims and excludes any liability in respect of the contents or for action taken based on this information.

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