Federal Financial Supervisory Authority (BaFin) is the financial regulator and supervisor of the Federal Republic of Germany. BaFin’s main task is to ensure the integrity and stability of the German financial system. It’s goal is to prevent the misuse of the financial system for the purpose of money laundering, terrorist financing and other criminal offences, which can lead to a threat to assets of an institute that is abused for these purposes.
BaFin is combined under one umbrella; the supervision of banks and financial services providers, insurance undertakings and securities trading. It is an autonomous public-law institution which is subject to the legal and technical oversight of the Federal Ministry of Finance. In addition, BaFin regularly audits firms with obligations under the German Anti-Money Laundering Act.
As an obliged entity, you are required to implement procedures that consist of an efficient risk management system which sufficiently ensures that the due diligence, reporting, record-keeping obligations are met, regularly monitored and that necessary SARs are filed.
The risk management must include a risk analysis and internal risk measures. This obligation is central to the risk-based approach regarding money laundering and terrorist financing. The type and extent of the business of the obliged parties must be considered when designing your risk management system.
In appropriate circumstances, you can apply simplified due diligence measures if you determine that there is only a low risk of ML/TF. Enhanced due diligence measures must be complied with if you determine during your risk analysis or in individual cases that there might be a higher risk of money laundering or terrorist financing.
There is a requirement for you to record, retain data collected and information gathered when complying with your due diligence obligations. The records and other evidence are required to be retained for five years unless other statutory provisions governing record-keeping and retention requirements stipulate a longer period.
If sufficient grounds exist that indicate that money laundering or terrorist financing have been committed, you must report without delay to the German Financial Intelligence Unit the relevant circumstances.
The reporting obligation requires facts which indicate that:
Property in relation to a business relationship, brokerage or a transaction originates from a criminal offence.
A business transaction, other transaction or asset is related to terrorist financing, or
The contracting party has not fulfilled its obligation to disclose to you whether it intends to establish, continue or conduct the business relationship or transaction on behalf of a beneficial owner.
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* This page is intended as general information only and should not be relied on as the sole source of information for your AML obligations and AML program. Please visit your local regulatory authority sites for the latest relevant and full information.