Money laundering and terrorist financing have a significant negative impact on our economy and society. Combating and curbing them must therefore be given high priority at all levels of public and private action. The guarantors for effectively combating these criminal phenomena are the so-called "obliged entities" within the meaning of the "Act on the Tracing of Profits from Serious Crime" (Money Laundering Act - GwG). These obliged entities include, among many others, income tax assistance associations and their advice centres. As the supervisory authority, the Frankfurt am Main Regional Finance Directorate is responsible for monitoring whether the income tax assistance associations and advice centres based in Hesse fulfil their obligations to combat money laundering and terrorism arising from the GwG and the regulations derived from it.
Money laundering is the smuggling of criminally acquired funds from serious criminal offences (e.g. drug or human trafficking) into the legal financial system. The aim of money launderers is to conceal the true origin of these proceeds and to prevent law enforcement authorities from accessing them.
Terrorist financing is the use of funds or assets to support or carry out terrorist activities.
Money laundering (even if committed recklessly) and terrorist financing are punishable offences in Germany (Sections 261 and 89c of the German Criminal Code) - this also applies to aiding and abetting. Effective money laundering prevention therefore also serves to avoid making oneself liable to prosecution.
It is conceivable that criminals also use income tax assistance associations and their advice centres for their own purposes. As a rule, they are not even aware that they are being misused for money laundering or terrorist financing. The aim of the Money Laundering Act is therefore to prevent criminals from misusing honest market participants to launder money or finance terrorism. To this end, the Money Laundering Act imposes special obligations on certain companies and individuals - the so-called "obliged entities" under Section 2 of the Money Laundering Act - which are intended to make their business relationships and business activities transparent. This is intended to make it more difficult for obliged entities to conduct business with a criminal background and to contribute to their detection.
Since the revision of the GwG on 1 January 2020, income tax assistance associations and their advice centres have been obliged entities within the meaning of the GwG in accordance with Section 2 (1) no. 12 GwG, insofar as they act in the exercise of their trade.
Pursuant to Section 50 No. 7a GwG, the Frankfurt am Main Regional Finance Directorate is the competent supervisory authority for the implementation of the Money Laundering Act by income tax assistance associations.
Effective money laundering prevention generally consists of risk management (Sections 4 et seq. GwG), which consists of a risk analysis and internal security measures derived from this, due diligence obligations in relation to contractual partners (Sections 10 et seq. GwG) and the obligation to report suspicions (Section 43 GwG). In addition, there are comprehensive documentation obligations (Section 8 GwG).
In order to prevent money laundering and terrorist financing, income tax assistance organisations must have an effective risk management system in place that is appropriate to the nature and scope of their business activities. The person responsible for risk management and for compliance with the provisions of money laundering law arising from the GwG is a member of the management level (Section 4 GwG), i.e. the executive board of the income tax assistance association, who must be appointed. Risk management must include a risk analysis and internal security measures in accordance with Section 4 (2) GwG.
Income tax assistance organisations must determine the risks of money laundering and terrorist financing that exist for the business they conduct (Section 5 GwG). The income tax assistance associations must create appropriate business and client-related internal security measures to manage and minimise the risks of money laundering and terrorist financing in the form of principles, procedures and controls (Section 6 GwG).
From 1 January 2020, the identification of contractual partners required by the GwG must be carried out on the basis of a domestic passport, identity card or substitute passport or identity card that is recognised or approved in accordance with immigration law (Section 12 (1) GwG). Identification must be documented by making a copy of the complete document. It can also be recorded digitally (Section 8 (2) GwG). An existing activation code (FSC) of the member is not sufficient. This obligation also applies to existing members!
The obliged entities are obliged to report to the Central Financial Transaction Investigation Unit in the event of suspicion of money laundering or terrorist financing, among other things. The details can be found in § 43 GwG. Obligated parties are only not required to report if the reportable facts relate to information that they have received in the course of providing legal advice or representing clients in legal proceedings. However, an exception applies if the income tax assistance association has actual knowledge that "the contractual partner has used the legal advice or legal representation for the purpose of money laundering, terrorist financing or another criminal offence or a case of paragraph 6 exists" (Section 43 para. 2 sentence 2 GWG). In this case, a suspicious activity report must be submitted to the Financial Intelligence Unit (FIU) (Section 27 GwG).
Pursuant to Section 6 (5) GwG, income tax assistance organisations must create an opportunity for their employees to report actual or potential violations of money laundering regulations internally while maintaining the confidentiality of their identity (internal whistleblowing system).
According to Section 47 (1) GwG, the income tax assistance association is not authorised to inform "the contractual partner, the client of the transaction and other third parties" - e.g. the member concerned - of an intended or submitted report in accordance with Section 43 (1) GwG, any subsequent investigation proceedings or a request for information from the FIU.
Information may only be passed on in certain exceptional cases (Section 47 GwG), e.g:
If a suspicious activity report has been made, the activity for which the report was made may not be carried out for the time being. According to Section 46 para. 1 sentence 1 GwG, this may only take place if the consent of the FIU or the public prosecutor's office has been submitted or if the third working day after the date of dispatch of the report has elapsed without the FIU or the public prosecutor's office prohibiting the activity from being carried out.
Further information can be found in our interpretation and application notes under Links & Downloads for the implementation of due diligence obligations and internal security measures in accordance with the statutory provisions for the prevention of money laundering and terrorist financing, which we provide to you in a regularly updated version in accordance with Section 51 (8) GwG as the competent supervisory authority for the implementation of the Money Laundering Act by the income tax assistance associations.
Obligated parties who do not fulfil their obligations under the Money Laundering Act risk a loss of image due to the publication obligation provided for in the Money Laundering Act. The supervisory authorities must publish final measures and incontestable decisions on fines on their websites for a period of five years. The type and scope of the offence and the persons responsible for the offence are named.
The law also authorises the supervisory authorities to take measures and issue orders to ensure compliance with the obligations under money laundering law. These can also be enforced in administrative proceedings through severe fines. Failure to prevent money laundering, which also includes the prevention of terrorist financing, can have serious consequences for income tax assistance organisations. The economic damage that those affected often suffer in the event of money laundering is not the only problem. For breaches of duty under the GwG that do not require a direct link to a money laundering offence, fines of up to 150,000 euros can be imposed for reckless, negligent or intentional breaches, depending on the individual case. In the case of serious, repeated or systematic offences, the amount of the fine can even be up to 1 million euros or up to twice the economic benefit derived from the offence.
As part of its supervision of income tax assistance associations and advice centres based in Hesse in accordance with Section 53 of the German Money Laundering Act (GwG), the Frankfurt am Main Regional Tax Office provides a system for receiving information on potential or actual violations of the Money Laundering Act and other provisions for the prevention of money laundering and terrorist financing. The system enables reports to be submitted via a secure communication channel. Reports can also be submitted anonymously. The electronic whistleblowing system will be available shortly.
However, you can also submit your reports by post or in person to the
- as the supervisory authority for income tax assistance associations under the GwG -
Zum Gottschalkhof 3
60594 Frankfurt am Main
Service telephone: + 49 69 58303-2672
If you have any queries or wish to make a report by telephone, our service telephone is available during general business hours.
