On December 11, 2018, the German Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin, or Federal Financial Supervisory Authority) announced that it had issued interpretations and application notes pursuant to Section 51(8) of the Geldwäschegesetz (GwG, or Money Laundering Act). That subsection of the GwG provides in pertinent part (in unofficial translation) that BaFin shall provide the obliged (covered) entities “with regularly updated interpretative and application instructions for the implementation of due diligence and internal safeguards in accordance with the legal provisions on the prevention of money laundering and terrorist financing.”
The new guidance, downloadable here, applies to all obliged entities under BaFin’s money laundering supervision. As BaFin notes, those entities include “not just credit institutions, financial services institutions and payment institutions, but also life insurance undertakings, German asset management companies (Kapitalverwaltungsgesellschaften) and persons and companies that sell or convert e-money.” They also include lawyers conducting certain defined kinds of transactions for their clients, auditors, and chartered accountants.
The new guidance, according to the BaFin press release,
give concrete advice on the legal regulations that are to support the obliged entities in the implementation of their obligations.
The instructions serve to properly implement customer due diligence and internal safeguards and follow a risk-based approach. In particular, legal innovations in the interpretative guidance are explained. Thus, for example, the concept of the fictitious beneficial owner is explained concretely. In addition, the obligations in connection with the identification of the apparent person are clarified. (Unofficial translation)
Finally, the interpretative guidance addresses developments in the market and regulations.
German financial institutions – and the lawyers who advise them or provide services that come within the scope of the GwG –should therefore pay close attention to the newly issued guidance, and determine whether the guidance warrants changes in their Anti-Money Laundering programs or internal controls. The full text of the guidance document is 86 pages, so institutions should review it with care to identify specific points on which BaFin has provided guidance for the first time or which may raise complex legal or compliance issues.