The new GwG – What are the changes?

Mann berüht einen Kreis aus diversen Symbolen

Duty to register electronically with the FIU:

The amended law now provides that all obliged entities must register electronically with the FIU, independently of whether they wish to report a suspicion (§ 45 subsection 1 sentence 2 GwG). The duty to report any suspicions applies, regardless of whether the obliged entities must provide evidence of specific risk management activities or are actually required to comply with due diligence requirements.

Data protection:

Through the amendment it is now stated even more explicitly that obliged entities are permitted to collect, process and transmit their business partners’ details (§ 11 a GwG). However, this is merely a clarification of what had already been part of the applicable legislation: Upon request by the supervisory authorities and the law enforcement authorities, obliged entities must present the data collected in the context of the GwG.

Due diligence requirements for goods traders, art agents and art store keepers:

The GwG amendment provides for art agents and art store keepers to be added to the group of obliged entities of goods traders (§ 2 subsection 1 no. 16 GwG). Similar rules regarding risk management and complying with due diligence requirements apply for art agents and art store keepers, apart from the fact that the payment mode (cash or non-cash) is insignificant.

bq.This means: Anyone trading art objects with a transaction value of at least EUR 10,000.00, who arranges for transactions concerning such objects or stores them in duty-free areas, must have risk management procedures in place and fulfil due diligence requirements, also in the case of non-cash transactions.

With regard to trading activities concerning high-value goods, legislature now makes a distinction for trading precious metals with regard to the applicable threshold values:
Precious metal traders are required to have effective risk management in place and to comply with due diligence requirements, if they are involved in cash transactions in which they accept or pay amounts of EUR 2,000.00 and up. Precious metal traders are companies who trade high-value goods such as gold, silver and platinum, for example for investment purposes.

Due diligence requirements for real estate agents:

The group of obliged entities of real estate agents (§ 2 subsection 1 no. 14 in conjunction with § 1 subsection 11 GwG) now also includes estate agents who arrange rental/lease agreements. The amount of the monthly rent/leasing fee determines, whether requirements apply for rental agents. Rental agents arranging for transactions with a monthly rent of EUR 10,000.00 and up must have risk management procedures in place and comply with the due diligence requirements. It is irrelevant in this case, whether transactions are handled in cash or cashless.

Furthermore, real estate agents who arrange for the purchase or sale of real estate as a commercial service, continue having to identify both contract parties if there is any serious interest in buying the property in question. However, the legislator has found that in the case of a real estate acquisition, it can happen that a party is identified by multiple estate agents. This is why the following rule has applied since 1 January 2020: If both parties involved in a sales transaction instruct an estate agent, each of these agents must only identify their own contract partner (§ 11 subsection 2 GwG).

Politically exposed persons:

Enhanced due diligence requirements applied for politically exposed persons (PeP), even before the most recent amendment. Obliged entities had to check the PeP status of their contract partners as part of their due diligence obligations, and this continues to be the case. Planning provides for the respective specific functions and roles to be consolidated in line with the legal and administrative guidelines of the individual member states. By January 2020, these must present lists to the EU Commission, explaining the status of the respective politically exposed persons. These legal changes do not give rise to any additional requirements. The amendment is intended to make fulfilling their duty easier for the Obliged entities.

Transparency register:

The GwG amendment provides for public access to the transparency register. Everybody can request access to the transparency register in the future, to identify the beneficial owners of a legal entity or an association of individuals. In the past, access was only granted to those with a legitimate interest. If Obliged entities detect any inconsistencies or out-of-date data when accessing the register, they must report such findings to the Federal Gazette (Bundesanzeiger) as the organisation that keeps the register. Failure to submit such notification is punishable by a fine.

Definition of financial companies:

The group of obliged entities referred to as financial companies has also been clarified. In the past, these were defined through a reference to the Banking Act. The new version of the Money Laundering Act contains its own definition (§ 1 subsection 24 GwG).

Registration of service providers for companies and trust property and trustees:

Obliged entities according to § 2 subsection 1 no. 13 GwG must now register with the supervisory authority indicating their specific activities, if they did not already require registration, listing, permission or a licence due to other regulations. The Senate Department for Economics accepts these notifications by mail or electronically, via the respective inbox. No particular formal requirements apply for registration. Applicants must indicate and explain their activities.

Provisions for fines:

The amendment also provides for a revision of the list of fines in § 56 subsection 1 GwG. The list of previously 64 offences that are punishable with a fine was increased to 74. Subsection 2 now includes 7 offences that can also be punished in the case of negligent action or forbearance (unlike those provided for in subsection 1). The level of fines continues to depend on the severity of a violation and on whether it is systematic.