Draft of the amendment of the German Anti Money Laundering Act
On 20 May 2019, the German Federal Ministry of Finance submitted a draft bill to implement the amending directive to the Fourth EU Money Laundering Directive (Directive [EU] 2018/843). for consultation. The directive must be transposed into national law by 10 January 2020. The changes in the fight against money laundering and the financing of terrorism foreseen in the directive can be seen as a reaction to the terrorist attacks in Paris and Brussels, the advance of crypto currencies and, last but not least, the huge money laundering scandal of Danske Bank.
Planned changes include, for example:
- the expansion of the circle of obliged persons under anti money laundering law,
- the harmonization of increased due diligence requirements in high-risk countries,
- a more concrete definition of the group of “politically exposed persons” (PEP) by lists of functions and offices of the Member States and the European Commission,
- public access to the electronic transparency register and the connection of the European transparency registers.
Amendments mainly concern the Anti Money Laundering Act (GWG), but also a number of other laws, such as the Banking Act, the Payment Services Supervision Act and the Insurance Supervision Act.
Extended scope of application; clarification on the industrial holding company
According to § 2 of the draft law, providers of electronic purses (so-called wallet providers) and platforms for the conversion of virtual currencies are now obliged under anti money laundering law pursuant to § 2 GWG. For goods traders, the threshold for the triggering of due diligence obligations shall be lowered from EUR 10,000 to EUR 2,000 with regard to trading in precious metals.
For real estate transactions, the law now also obliges brokers with regard to rental contracts with a monthly rent of at least 10,000 euros.
In the art sector, in addition to the art dealers, brokers and auction houses already included in the list, art stockholders (though limited to duty-free areas) will also be required to comply with anti money laundering laws for the first time in the future.
The term “financial enterprise” is now defined in the GWG without reference to the Banking Act. The draft of the new GWG contains a clarification, which will be welcomed by practitioners, by expressly excluding pure industrial holdings from the scope of application. According to the official justification to the draft law, these are holding companies which exclusively hold interest in companies outside the credit, financial and insurance institution sectors and which do not trade in, acquire for investment purposes or otherwise engage in business activities beyond the tasks associated with the management of these shares or interests.
More stringent obligations in banking and real estate sector
In the future, more stringent due diligence obligations will have to be observed in correspondent banking relationships within the EEA. Only if the risk assessment of a bank comes to the conclusion that there is no increased risk, such more stringent obligations shall not apply. This will constitute a reversal of the previous rule-exception relationship.
In order to take into account the increased risks in the real estate sector, the draft law envisages, among other things, more specific rules and a lowering of the threshold for the reporting of suspicions by the holders of independent professions in connection with real estate transactions.
The treatment of business relationships and transactions relating to high-risk countries identified by the EU Commission shall be harmonized. This is to be achieved not least through the specification of uniform, enhanced due diligence obligations.
The Directive also aims to standardize the treatment of Politically Exposed Persons (PEPs): by 10 January 2020, the Member States must submit lists to the Commission in which the functions and offices justifying the PEP status are named.
The transparency register will be publicly accessible in the future, however the existing consultation procedure will be maintained.
The federal cabinet will discuss the draft on June 19, 2019.