Jan-Philipp Rose of Belmont Legal was so friendly to allow me to publish his article on anti-money laundering in Germany on this blog. It follows below.
The new Draft Law on Money Laundering and its Consequences for Businesses in Germany
Following lengthy discussions, the German government recently finalised a draft law regarding the fight against money laundering and financing of terrorism. With this draft law, the government implemented the fourth European directive on money laundering (which came into force on 25 June 2015, giving the European member states two years to implement the directive).
With respect to the German legislative process, the draft law will come into force with effect as of summer 2017.
Key Element – the Transparency Register
A key element of the new law is the creation of a so-called “Transparency Register” in which businesses will disclose their legal ownership structure. This applies in particular to a GmbH, the German form of a limited liability company.
However, the Transparency Register will also serve as a central point of contact for publications of the ownership structure, which are already in existence. For example, as the law stands, the shareholder list of a German GmbH is already filed with the Commercial Register. It will then be retrievable in the Transparency Register without any further notification by the respective GmbH.
This procedure will limit the administrative duties of the companies.
However, the obligation to notify about the legal owners of a company alone is not sufficient. Any and all beneficial owners that (i) hold more than 25% of the shares (ii) represent a quarter of the voting rights or (iii) exercise control in a comparable way will be mentioned.
This also applies to several persons acting together in order to reach the 25% threshhold, which consequently means that any control agreements between such parties will also be filed with the Transparency Register and the company has an obligation to enquire about the existence of such agreements.
It is the duty of investment companies to provide information on the beneficial owners.
The details of the beneficial owners comprise inter alia the full name, date of birth, place of residence and the type and extent of the economic interest.
Access to the Transparency Register
Initially, it was foreseen that access to the Transparency Register would be restricted and available only to persons with a justified interest for a fee. However, there a plans on a European level to change the fourth money laundering directive so that access will be free of charge.
The German draft law would then have to be adapted
Notification Obligation and Penalties
The notifications should be made by the companies by 1 October 2017. If this deadline is missed, fees of up to EUR 100,000 can become due. In case of systematic violations, penalties of EUR 1 million or twice the economic advantage can become due.
The German Federal Ministry of Justice pointed out that – parallel to the changes described above – it is considering implementing changes regarding the shareholder list of a GmbH to be filed with the Commercial Register. In particular, the percentage of the shares of each shareholder should be indicated, thus allowing a direct identification of the shareholders holding more than 25% of the shares and consequently, a beneficial owner within the meaning of the draft law.
A pdf version of the article can be downloaded here.