Obligations under the Money Laundering Act for obliged entities in the non-financial sector (with the exception of organisers and intermediaries of games of chance pursuant to § 2 para. 1 no. 15 GwG)

Entrepreneurs or traders can be abused by dubious customers for money laundering or terrorist financing. Therefore, the Money Laundering Act provides for measures for certain industries and professional groups to protect themselves against such abuse. Both for these "obliged entities" of the Money Laundering Act and for their customers, it is important to know what preventive actions the law requires from companies and how customers should support the companies in doing so.

Money laundering refers to the introduction of illegally generated funds into the legal financial and economic cycle. Money laundering is punishable. Section 261(1) of the Criminal Code (Strafgesetzbuch, StGB) punishes money laundering with a custodial sentence of up to five years.

Terrorist financing is the provision or collection of assets to finance terrorist activities as well as corresponding acts of support (§ 89c StGB).

In order to prevent misuse for these purposes, you as an obligated party under the AMLA must take security measures both for your place of business in Hesse and for any branches or branches in other federal states and observe due diligence obligations when dealing with your business partners. The regional councils are responsible for monitoring the following sectors and occupational groups:

• Financial companies according to § 1 Abs24 GwG
  (e.g. investment companies, private equity firms, financial investment intermediaries and fee-based financial investment advisors, M&A advisors – each if certain other conditions are met),
• Insurance intermediaries according to § 59 Insurance Contract Act (without product-accessory intermediaries and tied insurance intermediaries who do not require a license under trade law) and only insofar as they broker life insurance or accident insurance with premium refund, grant certain loans or offer capitalization products
• Legal advisers (not chambered) as well as registered persons pursuant to § 10 of the Legal Services Act (if they participate in the planning or execution of certain transactions for their clients),
• service providers for companies and trusts or trustees (e.g. management consultants, providers of shelf companies and similar professions providing services to third parties),
• real estate agents (in the mediation of purchase properties and rental or leasehold properties from 10,000 euros monthly cold rent / lease) and
• Goods dealers (persons who trade in goods commercially), art brokers and art warehouse keepers, insofar as the storage takes place in duty-free zones. Many of the obligations only apply to transactions above a certain amount and sometimes only to cash payments.

If you are one of these obliged parties, you must take the measures necessary for your protection in a risk-oriented manner, insofar as the AMLA provides for this.

The obliged entities must know their customers, monitor business relationships and transactions for anomalies, take internal security measures appropriate to the risk and document all necessary data and essential measures. Through an individual analysis, the risks typical for business activities and business partners are to be identified in order to prevent misuse for money laundering purposes and terrorist financing. They must also report suspected cases to the Financial Transaction Investigations Centre (FIU) via the GoAML reporting portal.

The proper implementation of the Money Laundering Act for the aforementioned obliged entities is monitored in Hesse by the regional councils of Darmstadt, Giessen and Kassel. The Hessian Ministry of the Interior and Sport is responsible for the casinos and the acceptance points of the state lottery organiser, insofar as they broker sports betting, and the Darmstadt Regional Council is responsible for other obliged parties in the gambling sector.

If you, as an obligated party, wish to outsource anti-money laundering obligations to third parties ("outsourcing"), prior notification to the supervisory authority may be required. This concerns the outsourcing of internal security measures, including archiving obligations (recording and storage with regard to due diligence obligations) and the outsourcing of the submission of suspicious transaction reports.

You can ask the responsible regional council which documents are required for exemption from the obligation to appoint a money laundering officer or the documentation of the risk analysis.

Notification of the appointment/release of a (group) money laundering officer:
For the appointment/discharge of a (group) money laundering officer including deputy, there is an obligation to notify the supervisory authority. In principle, this must be done in advance. Only financial undertakings and obliged entities that are parent companies of a group and who therefore have to appoint a group money laundering officer are obliged by the AMLA to appoint money laundering officers. In addition, dealers of high-value goods and art brokers must appoint money laundering officers and a deputy, provided that they meet the requirements of the general ruling of the regional councils.

Outsourcing notification and exemption requests:
Depending on the scope of the documents submitted or to be examined and the complexity of the companies involved, a longer processing time must be expected.
Obligation to register with the FIU
By 1 January 2024 at the latest, all obliged entities under the Money Laundering Act must have registered electronically with the Financial Intelligence Unit (FIU).

Obligation to register in the Transparency Register
From August 2021, all companies subject to registration must actively enter their beneficial owners in the transparency register – the notification fiction is no longer necessary. For registered associations according to § 21 of the Civil Code, the obligation to notify does not apply in principle (§ 20a GwG).

The supervisory authorities may charge administrative costs for individual official acts in accordance with the Administrative Costs Regulations for the portfolio of the Ministry of the Interior and for Sport _ VwKostO- MdIS of 11 December 2018, as amended. The amount of the costs depends on the time required.

The supervisory authorities have special rights of access and inspection. Compliance with anti-money laundering obligations can be verified, for example, by means of a written survey and/or on-site inspections. In the case of breaches of due diligence, fines of up to 150,000.00 euros can be imposed – in the case of serious, repeated or systematic violations, even higher fines are possible. Necessary orders can be enforced, for example, with a penalty payment. Even a professional or business ban is possible. The supervisory authorities must publicly disclose legally binding measures they have imposed for violations of the Money Laundering Act. In addition, obliged entities may be liable to prosecution under the Criminal Code for reckless money laundering or aiding and abetting if they do not comply with money laundering regulations.