Germany’s AML/CTF supervisors
The Federal Republic of Germany's financial system is governed and overseen by the Federal Financial Supervisory Authority (BaFin). The integrity and stability of the German financial system are the primary responsibilities of BaFin. Its objective is to stop financial institutions from using the system improperly to commit crimes including money laundering, terrorism financing, and other crimes that could endanger the nation.
The regulation of banks, financial service providers, insurance companies, and securities trading are all unified under the support of BaFin. It is an independent public-law organisation that is governed by the Federal Ministry of Finance on both a legal and technical level. Additionally, BaFin routinely inspects businesses that are subject to the German Anti-Money Laundering Act's requirements.
How do you comply with AML/CTF regulations in Germany?
As an obligated entity, you must implement processes that comprise an effective risk management system which ensures that due diligence, reporting, recordkeeping, and frequent monitoring requirements are fulfilled, and that appropriate Suspicious Activity Reports (SARs) are issued.
Obligated entities must establish and follow an internal risk management programme. The programme must be founded on a risk-based approach to money laundering and terrorism financing (ML/TF), with the risk management strategy suited to the nature and extent of the needed parties' business operations.
You can apply streamlined due diligence approaches if you determine that there is only a minor risk of ML/TF. If you determine, through risk analysis or in special circumstances, that there is a higher risk of money laundering or terrorism financing, you must follow tougher due diligence processes.
In order to meet your duty of due diligence, you must keep a record of the data you gather. Unless additional statutory regulations governing record-keeping and retention duties specify a longer duration, records and other evidence must be preserved for 5 years.
What are my AML/CTF reporting obligations?
You must immediately inform the German Financial Intelligence Unit of the relevant facts if there are adequate grounds to believe that money laundering or terrorism financing has taken place.
The following information is required for the reporting obligation.
Property derived through a criminal offence is related to a business partnership, brokerage, or transaction
A commercial transaction, other transaction, or asset is connected to the financing of terrorism
The contracting party has not fulfilled its obligation to disclose to you whether it intends to establish, continue, or conduct the business relationship or transaction on behalf of a beneficial owner.
