Reporting suspicions of money laundering and whistleblowing under German law
| DOI | https://doi.org/10.1108/13685200310809419 |
| Pages | 52-56 |
| Published date | 01 January 2003 |
| Date | 01 January 2003 |
| Author | Katlen Blöker |
| Subject Matter | Accounting & finance |
Journal of Money Laundering Control Ð Vol. 6 No. 1
Reporting Suspicions of Money Laundering and
Whistleblowing under German Law
Katlen Blo
Ècker
INTRODUCTION
Under German law, there are two main legal tools
to combat and prevent money laundering: one is
s. 261 of the German Penal Code, which makes
money laundering a criminal offence with a max-
imum sentence of imprisonment of ten years.
1
The
other is the Money Laundering Act which specifies
duties for banks and certain other businesses and
professionals,
2
implementing the EC Council Direc-
tive on the prevention of the use of the financial
system for the purpose of money laundering.
3
As in most other countries, despite the fact that the
regulatory framework to combat money laundering
has been established, it is commonly held that there
are still not enough cases being reported and not
enough cases being tried in Germany. Apart from
the general problems caused by the money launder-
ing activities of organised crime, Germany is facing
an extra challenge: with the introduction of the Euro
in 2002 as legal tender, illegally obtained DM
banknotes will have to be laundered by criminals
at the beginning of next year at the latest or else they
lose their value. Therefore, a steep increase of money
laundering cases is to be expected which should be
reflected in a rising number of cases being reported.
Apart from border posts, the relevant authorities
have alerted banks, money exchange businesses and
other potentially involved professionals to be even
more cautious than usual.
REPORTING DUTIES BY CREDIT
INSTITUTIONS
The reporting of suspicious transactions is seen as one
of the most important contributions to combat
money laundering. The German Federal Banking
Supervisory Office has specified the framework laid
down in the Money Laundering Act for credit
institutions in the `Guidelines concerning measures to
be taken by credit institutions to combat and prevent
money laundering'.
The duties laid down in the Money Laundering
Act must not only be fulfilled by all German credit
institutions and their domestic branches, but also by
its branches abroad. Specific circumstances which are
endemic in the host country may be taken into
consideration.
4
Branches abroad, though, are exempt
from German reporting duties. In turn, locally
resident branches of foreign credit institutions are
subject to the Money Laundering Act, as well as EU
branches which are in that respect subject to
supervision by the host country.
Suspicious circumstances
A bank is obliged to report facts, indicating that a
certain financial transaction could serve money
laundering purposes, immediately to the relevant
authorities.
5
The report must contain all facts
suggesting that an envisaged financial transaction
serves the purpose of money laundering. Reporting
duties are not limited to financial operations that
require identification of the economic beneficiary,
but extend to all and any transactions carried out by
the bank.
As methods of money laundering change extre-
mely fast, the Central Credit Committee has tried to
establish a set of generally applicable rules which
indicate that a transaction might involve money
laundering, the so-called `criteria suggesting
suspicious cases'.
Facts are considered to fall under the category of
`suspicious circumstances', if one or more of the
following criteria is fulfilled:
(a) Transaction serves no apparent
purpose
The financial transaction serves no apparent
economic purpose and its business background
remains muddy Ð either with regard to the
identities of the persons involved or the purpose of
the transaction.
(b) The nature of the transaction does
not match client's business needs
The kind of transaction or the amount involved or
the receiver do not fit into the picture that the bank
Page 52
Journalof Money Laundering Control
Vol.6, No. 1, 2002, pp. 52 ±56
#HenryStewart Publications
ISSN1368-5201
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