Money laundering prevention for traders in goods

Based on the 4th EU Money Laundering Directive, the "Act on the Tracing of Profits from Serious Crimes (Money Laundering Act - AMLA)" was amended in June 2017. This imposes various obligations on goods traders in particular. At the centre of the new AMLA is the risk-based approach. This emphasises the preventive character of the fight against money laundering and terrorist financing and requires the establishment of a so-called money laundering-related risk management.

Its central components are an initial risk analysis that must be updated annually and, based on this, the establishment of internal security measures including customer-related due diligence obligations.

As part of the risk analysis, goods traders must identify and assess the risks of their operational business with regard to money laundering and terrorist financing. In particular, geographical risks, product risks, customer risks as well as transaction and distribution risks must be taken into account. The risk analysis must be documented, regularly reviewed and, if necessary, updated and submitted to the supervisory authority upon request.

Based on the risk analysis, commodity dealers must then "establish appropriate business and customer-related internal safeguards to manage and mitigate risks of money laundering and terrorist financing in the form of policies, procedures and controls".

These measures include, among others, the application of customer due diligence, the fulfilment of reporting obligations (suspicious activity reports), the recording and retention of documents, the establishment of group-wide procedures, employee background checks, employee training and the establishment of a whistleblower system. Both the risk analysis and the internal safeguards must be approved by a member of the freight handler's senior management. The internal safeguards are to be independently audited as appropriate given the nature and scale of the business. The supervisory authority may also order the appointment of a money laundering officer in certain circumstances.

Goods traders who do not make or receive cash payments of at least 10,000 euros are not necessarily obliged to set up a risk management system including the measures outlined above. However, caution is required here, because "privileged" goods traders also have to fulfil customer-related due diligence obligations. This applies as soon as there are facts indicating that assets, a transaction or a business relationship are related to money laundering or terrorist financing or a cash transaction of 10,000 euros or more is carried out. Preventive recognition of these facts can only be achieved on the basis of a risk analysis and by properly trained employees. In addition, in this case, the requirements for reporting suspicions as well as recording and storage must be fulfilled.

Violations of the provisions of the MLA can result in fines of 100,000 euros - if they are serious, repeated or systematic, even up to 1,000,000 euros or up to twice the economic benefit derived from the violation. In addition, unappealable decisions on fines are published in the transparency register ("naming & shaming").