Money laundering prevention

Since the revised Anti-Money Laundering Act (AMLA) came into force in 2017 as a result of the 4th EU Anti-Money Laundering Directive, goods traders in particular have been subject to various obligations.

Although facilitations are also provided for goods traders if they do not carry out or receive cash transactions of EUR 10,000 or more, companies are not released from a careful examination of the extent to which they are subject to individual aspects of the AMLA. This is because goods traders are generally obliged entities within the meaning of the GwG. In addition, exemptions must be observed.

A risk-based approach is moving to the centre of money laundering prevention. Obligated parties must implement effective money laundering-specific risk management, which includes a risk analysis (group-wide if applicable) and internal security measures. The risk analysis must be documented, regularly updated and made available to the supervisory authorities. It forms the basis for internal security measures, the functionality of which must be monitored and updated as necessary. The internal security measures include principles, procedures and controls for dealing with risks, the fulfilment of due diligence obligations towards customers (i.e. KYC processes), an internal whistleblower system, the fulfilment of suspicious activity reporting obligations, employee training and reliability checks as well as recording and retention obligations and the appointment of a money laundering officer for the Group. The security measures based on the risk analysis must also be standardised across the Group.

The information that obliged entities must obtain and document internally in future is also extensive. This includes the type and scope of the beneficial interest of the beneficial owner. This information must be kept up to date at all times and reported to the transparency register - a considerable effort.

Non-compliance with the obligations will result in drastic penalties for goods traders: Fines of up to one million euros or up to twice the economic benefit derived from the offence are envisaged. There is also the threat of public disclosure of the offence and the person responsible for it - a penalty that could be very damaging to reputation and business.

Since 1 January 2020, the 5th EU Anti-Money Laundering Directive has once again increased the requirements for money laundering-related risk management, especially for goods traders and real estate agents.

Closely related to money laundering and terrorist financing are the challenges in relation to sanctions and embargoes. The latest reactions to current conflicts show that this topic is highly topical. Just like the global political situation, sanctions and embargoes are subject to constant change. This leads to numerous challenges for companies with international purchasing and/or sales markets. The associated legal risks due to incorrect application, particularly in the EU and in or in relation to the USA, must therefore be assessed, monitored and managed in a functioning governance system.