United Nations Climate Change
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On 11 December 2018, the German Financial Supervisory Authority (BaFin) published its Guidance Notes on the German Money Laundering Act (Auslegungs- und Anwendungshinweise zum Geldwäschegesetz – Guidance Notes).
Pursuant to the German Money Laundering Act (GwG), BaFin has to provide obliged entities belonging to the financial sector with (regularly updated) interpretation and application notes for the implementation of the due diligence and internal safeguard measures to prevent money laundering. Within their scope of application, the Guidance Notes supersede the previous notes which had been prepared by the associations of the financial sector in cooperation with BaFin and which have become partly obsolete with the transposition of Fourth EU Anti-Money Laundering Directive (Directive (EU) 2015/849 – AMLD4) on 26 June 2017. This is particularly relevant for the Notes of German Banking Industry Committee (Hinweise der Deutschen Kreditwirtschaft – GBIC Notes) dated 1 February 2014.
The Guidance Notes are addressed, inter alia, to the following obliged entities:
The Guidance Notes are immediately binding for these obliged entities; internal compliance measures, guidelines and processes have to be adjusted with immediate effect. In this context, it is of particular importance to note that the penalties for violations of the GwG have been significantly increased in connection with the implementation of AMLD4. Obliged financial sector entities could incur administrative penalties of up to EUR 5 million or up to 10 percent of the preceding year's aggregate turnover.
Obliged entities outside the financial sector (e.g., real estate agents, organisers and retailers of games of chance, traders in goods), are, however, not bound by the Guidance Notes. Further clarification of the provisions of the GwG for these obliged entities is to be provided by the respective competent supervisory authorities.
The Guidance Notes clarify some of the questions that had arisen in connection with the implementation of AMLD4 and the relating restatement of the GwG. At the same time, however, it is to be noted that the Guidance Notes are, in some respects, less detailed than the GBIC Notes. Of the numerous individual questions, we would like to address only two topics of the Guidance Notes Interpretation and Application Notes that are of particular relevance in practice:
Obliged entities belonging to the financial sector should examine whether their internal compliance measures are in line with the requirements of the Guidance Notes. In practice, one of the challenges will be that the Guidance Notes provide significantly less practical examples when compared to the GBIC Notes. The obliged entity itself is responsible for identifying and deciding whether or not any measures are to be taken. In order to avoid allegations of incorrect implementation - or lack - of compliance measures (which could result in substantial fines), the internal compliance measure should be carefully assessed.
IMO 2020 is almost upon us. Readers are well aware of the impending switch to 0.5 percent fuel mandated by Annex VI of MARPOL which will cause an anticipated drop in HSFO demand, the potential hazards of new untested LSFO blends, the concerns around scrubber operations, the debate over open loop versus closed loop, and the myriad of other risks associated with the impending regulatory change.