Editor’s Note
This article examines key adjustments to Germany’s anti-money laundering framework in 2022, highlighting that while core legislation remains stable, expired transitional periods and new obligations under the Transparency Register warrant close attention from regulated entities.
While the national anti-money laundering (AML) law has not changed significantly at first glance since the last amendments to the Money Laundering Act (GwG) in 2017 and 2020, a closer look in 2022 reveals several important adjustments with implications that obligated entities should be aware of. Transitional periods expired, which had granted a deferral for entry into the Transparency Register under the Transparency Register and Financial Information Act (FraFinG Gw) for those who had not previously been subject to registration requirements. Certainly noteworthy are the two Sanctions Enforcement Acts (SDG I and II) of the federal government. At the end of the year, the European Council summarized its ideas for a common approach against money laundering and terrorist financing based on the 2021 anti-money laundering legislative package, concerning, for example, a new funds transfer regulation, the status of the new sixth directive (AMLD6), or the launch of the European supervisory authority, the Anti Money Laundering Agency (AMLA).
Under the Czech Presidency, the European Council presented its views at the end of 2022 on the Commission’s legislative package against money laundering and terrorist financing (AML/CFT) from July 2021. This enables trilogue negotiations with Parliament and the Commission to initiate the necessary legal changes in 2023. The package of measures contains four building blocks:
1. This includes the Regulation on Anti-Money Laundering and Countering the Financing of Terrorism (AMLR) as a compliance rulebook for obligated entities, which contains, among other things, the repeatedly discussed plan for a uniform cash limit of EUR 10,000 for cash payments, especially in goods trading. Furthermore, the trade in precious metals in the broadest sense will remain in focus, which should particularly interest the jewelry and watch industry. Additionally, the continued effort regarding the transparency of beneficial ownership structures is on the common agenda.
2. Included is the new sixth EU Anti-Money Laundering Directive (AMLD6) with a transparency focus on beneficial owners and an emphasis on an expanded EU list structure for third countries, which will be used by the EU for consequences if country risks for the EU area are identified. This directive must be transposed into the national law of the member states and will be addressed again in the next update. On a side note, the updated EU-wide risk analysis at the end of 2022, which supplements the respective national analyses for the financial and non-financial sectors at a supranational level, should be mentioned here.
3. The package of measures also includes aligning and supplementing the rules for the still dynamic crypto market, primarily to subject providers to customer due diligence obligations and to set transaction limits. This is to be addressed by a new Funds Transfer Regulation (TFR), which adapts the anti-money laundering regulations.
4. The last of the four elements, so to speak the cornerstone, is the Establishment Regulation (AMLAR) for the new European Anti-Money Laundering Authority AMLA, which will be established in 2023 and will begin its work with obligated entities, equipped with extensive supervisory instruments such as orders or fines, no earlier than the following year. Even though this is not expected before 2024, not only the financial sector will be affected.
Following SDG I from May 2022, the German legislator pushed through SDG II by the end of the year. Through this article law, legal changes can be implemented, including in the GwG via inserted individual regulations on domestic real estate transactions. With this new tool, cash transactions for the sale and acquisition of real estate are fundamentally prohibited. Thus, effective from April 2023, cash and cash-substitute transactions involving precious metals and cryptocurrency in real estate purchases and sales are a thing of the past. This prohibition extends to transactions with company shares insofar as they are related to real estate.
In short, the legislator has created a new basis to be able to enforce economic sanctions administratively. This is to be enabled by a new central office located at the federal level, which will be equipped with the necessary administrative instruments and competencies.
