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唐朱昌
唐朱昌
教授,博士生导师。复旦大学中国反洗钱研究中心首任主任,复旦大学俄...
严立新
严立新
复旦大学经济学院、金融研究院副教授,中国反洗钱研究中心执行主...
陈浩然
陈浩然
复旦大学法学院教授、博士生导师;复旦大学国际刑法研究中心主任。...
何 萍
何 萍
华东政法大学刑法学教授,复旦大学中国反洗钱研究中心特聘研究员,荷...
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李小杰
安永金融服务风险管理、咨询总监,曾任蚂蚁金服反洗钱总监,复旦大学...
周锦贤
周锦贤
周锦贤先生,香港人,广州暨南大学法律学士,复旦大学中国反洗钱研究中...
童文俊
童文俊
高级经济师,复旦大学金融学博士,复旦大学经济学博士后。现供职于中...
汤 俊
汤 俊
中南财经政法大学教授,计算机科学与技术专业工学博士,复旦大学理论...
李 刚
李 刚
生辰:1977.7.26 籍贯:辽宁抚顺 民族:汉 党派:九三学社 职称:教授 研究...
祝亚雄
祝亚雄
祝亚雄,1974年生,浙江衢州人。浙江师范大学经济与管理学院副教授,博...
高增安
高增安
复旦大学中国反洗钱研究中心特聘研究员,专事反洗钱与贸易领域的研...
顾卿华
顾卿华
复旦大学中国反洗钱研究中心特聘研究员;现任安永管理咨询服务合伙...
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Germany implements the 6th Anti-Money Laundering Directive – What financial services firms need to know now

 

https://www.jdsupra.com/legalnews/germany-implements-the-6th-anti-money-80656/

 

On October 14, 2020, the German Federal Government proposed the Draft Act for the Effective Prosecution of Money Laundering (Gesetz zur Verbesserung der strafrechtlichen Bekämpfung der Geldwäsche – the Draft Act)1 to implement the EU’s Sixth Anti-Money-Laundering Directive (AMLD6)2 into German law. The AMLD6 aims to improve the harmonization of the criminal liability of money laundering and terrorist financing across the EU-27. In doing so, it significantly differs from its predecessors and their implementation in previous German anti-money laundering legislation which mainly dealt with regulatory issues such as the obligation to conduct know your customer (KYC) checks and to report suspicious transactions. This Client Alert summarizes the key proposals in the Draft Act including, highlights the gold plating approach taken by the German government and takes a closer look at its regulatory implications on financial services firms and insurance undertakings.

 

Over and above implementing the EU’s AMLD6 regime into German law, the Draft Act sets out to achieve a “paradigm shift” (grundlegende Reform)3 in the prosecution of money laundering in Germany by abandoning the concept of a catalogue of predicate offenses, i.e. underlying criminal activity.4 In other words, the proposed money laundering offense, as a matter of German law, will be able to capture profits derived from any criminal activity.5 This aims to make prosecution easier and more effective, notably where multiple actors and activities are involved. This approach gold plates the EU’s current regime6 considerably, as the latter, not at least due to limited EU legislative competences in criminal matters, is based on a minimum catalogue of predicate offenses.7

 

Financial services firms, insurance undertakings and other “obliged entities” (Verpflichtete) are not the primary focus of the AMLD6 or the Draft Act. In fact, the Draft Act does not propose any changes to the German Anti-Money-Laundering Act (Geldwäschegesetz – GwG), which implements the requirements of the EU’s existing money laundering regime i.e. AMLD1-5. This being said, the GwG defines money laundering by reference to the definition in the German Criminal Code (Strafgesetzbuch – StGB). Therefore, financial services firms as well as other obliged entities that are within the scope of the GwG may wish to revisit their AML processes and documentation to ensure such processes are aligned with the changes proposed by the Draft Act when the new Draft Act comes into effect.

 

The Draft Act is not expected to affect the regulatory burden of obliged entities severely, but it will change processes and procedures. In respect of the duty to report suspicious behavior, the German Federal Government highlighted in its explanatory notes accompanying the Draft Act that the reporting obligation does not require obliged entities to determine a particular predicate offense – which is the job of the prosecutor – but rather to report suspicious transactions without assessing whether a predicative offense is given.8 Therefore, changes in the predicate offense would, in the opinion of the German Federal Government, not affect existing reporting practices. The same applies to KYC checks.

 

Finally, it is worth noticing that the German regime’s proposed criminal offense of money laundering now contains a penalty framework specifically referring to those persons listed in the GwG as “obliged entities”. While the general punishment for money laundering is up to five years of imprisonment (with minimum term), an intentional offense by an obliged person under the GWG carries a minimum sanction of 3 months.9

 

Prosecuting money laundering will become considerably easier in Germany. In fact, one of the main challenges of such a prosecution in the past was to prove beyond reasonable doubt that actus reus and mens rea of a predicate offense had been satisfied. Under the Draft Act, prosecutors will only have to prove beyond reasonable doubt that the profit was derived from criminal activity. Furthermore, the Draft Act extends the investigative power of prosecutors, by making greater use of online searches as well as surveillance of electronic and telephone communications in the investigation of money laundering.10 It also assigns the prosecution of money laundering to the criminal court divisions for business offenses (Wirtschaftsstrafkammer) at the regional court (Landgericht),11 where judges are specialized in financial crime cases.

 

To sum up the rationale and key changes of the Draft Act, we refer to the statement by German Federal Minister of Justice Christine Lambrecht in August 202012 as part of the announcement of the proposed Draft Act (our emphasis in bold):

 

We need to make law enforcement much more effective in this area [money laundering] to better combat organized crime and serious financial crimes. Proof of money laundering shall be much easier in future. That is why we want to replace the complex old offence of money laundering with a clear new criminal charge and extend it considerably. It will no longer be necessary to prove that assets originate from specific offences.

 

The only decisive factor will then be that assets have been obtained through criminal activity, whether through drug trafficking, protection racketing, trafficking in human beings, fraud or infidelity. If the perpetrator accepts the criminal origin and hides or disguises the asset, the new offence of money laundering should take effect. This will make it much easier for public prosecutors and courts to prove money laundering and to hold perpetrators consistently accountable".

 

If you would like to discuss strategic options, in particular, how the changes to Germany’s AML regime will impact financial crime prevention systems and controls (including non-documented arrangements) that obliged entities will need to maintain please contact our Eurozone Hub key contacts.