Germany: BaFin provides Guidance on the German Money Laundering Act


Obliged entities of the German Money Laundering Act

Obliged entities who have to fulfil their duties according to the German Money Laundering Act are, inter alia, insurance undertakings as defined in Article 13 no. 1 of the Solvency II Directive and branches located in Germany of such companies abroad to the extent they offer life insurance services or accident insurance contracts with return of premiums covered by the Solvency II Directive. Moreover, insurance undertakings that grant loans within the meaning of sect. 1 subsect. 1 sentence 2 no. 2 of the German Banking Act (KWG) – thus monetary loans or acceptance facilities – are explicitly obligated.

Therefore, the Guidance issued by BaFin should be considered by the German branches of these foreign companies as well.

Content of the Guidance

BaFin issues explanations with regard to important provisions of the German Money Laundering Act.

With regard to insurance undertakings, it makes clear which activities of life insurance companies are considered be subject to the Act (f.ex. life insurance, pension insurance, complementary insurance to life insurance and the like) and which are not (f.ex. company pension schemes).

Moreover, BaFin issues guidance on how to fulfil the due diligence obligations towards the contractual partners, i.e. identification of the contractual partner and of the beneficial owners of the contractual partners, monitoring the business relationship etc. It also explains in which way certain obligations can be fulfilled by third parties on behalf of the obliged undertaking.

In addition, explanations are made with regard to the internal risk analysis and internal safeguarding measures with regard to anti-money laundering to be carried out by the obliged entities. BaFin points out that the undertakings, in order to conduct their internal risk analysis, also have to take into account the Common Guidelines on Risk Factors published by EIOPA on 4 January 2018. Especially, these Guidelines contain area specific explanations in order to enable the obliged entities to fulfil their due diligence obligations. For example, Chapter 7 of the Guidelines relates to life insurance undertakings.

However, BaFin does not issue guidance on the special provisions for insurance undertakings laid down in sect. 52 et seq. of the German Insurance Supervisory Act (VAG). Rather, the EIOPA-Guidelines mentioned above have to be taken into account.