AML package (1) – Money laundering versus sanctions

AML-Paket (1) – Geldwäsche versus Sanktionen | von Annerton Anwälten Sebstian Glaab und Till Christopher Otto

With the publication of the compromise text on the new Anti-Money Laundering Regulation (“AML-R”) and the so-called Sixth Anti-Money Laundering Directive (“AML-D”) on 12 February 2024, many regulatory innovations have been communicated at least indicatively and long-standing discussions/uncertainties have been ended and resolved. Even though the so-called “AML package” still has to be published in the Official Journal of the EU and the member states have time to implement it, it is already clear that “the long-awaited symbiosis of regulation in the area of money laundering and sanctions has taken place”.

Current regulatory framework

A look at the current regulatory requirements in terms of money laundering prevention and measures to comply with sanctions quickly leads to the conclusion that these topics are not yet linked in a targeted manner. This is because the issue of money laundering prevention (including combating the financing of terrorism) is regulated in the Money Laundering Act (Geldwäschegesetz – GwG), while regulations on sanctions (including embargoes) can be found in particular in the Foreign Trade and Payments Act (Außenwirtschaftsgesetz – AWG) and the Foreign Trade and Payments Ordinance (Außenwirtschaftsverordnung – AWV). It is difficult for obligated partiesobliged entities/users to separate these topics in their day-to-day business and, from a regulatory perspective, it is not expedient to do so.

New regulations (money laundering and sanctions)

The regulatory thrust of the AML package, including the hoped-for effectiveness in combating money laundering, is no longer limited to money laundering and terrorist financing, but also includes measures relating to financial sanctions. This thrust and expansion of the “scope” of the regulatory requirements is set out in recital 21 of the AML-R. It emphasises that, in addition to determining the inherent risk of money laundering and terrorist financing, obliged entities must also take into account non-compliance with financial sanctions.

Specific catalogue of measures

In particular, Art. 7 AML-R, which defines the scope of internal processes, risk management and staffing, sets out what must be observed and implemented by obliged entities. The regulatory requirements also explicitly include the topic of financial sanctions. Accordingly, the following measures must be taken:

  • Carrying out and updating a risk analysis
  • Risk management and written regulations
  • Customer due diligence obligations
  • Reporting obligations
  • Outsourcing
  • Recording and storage
  • Monitoring compliance with the written regulations
  • Reliability of employees
  • Internal reporting obligations
  • Training system

Compliance with the aforementioned regulatory requirements must be regularly monitored by internal or external persons. The checks must be carried out in a risk-orientated manner and require appropriate documentation.

Implementation and projects

The new regulatory requirements combine the areas of money laundering prevention and sanctions. This bundling is also likely to require structural and organisational adjustments by the obliged entities. In particular, it should be determined and – if necessary – adapted which employee is responsible for the subject areas. It must also be ensured that the information reaches the responsible manager and that appropriate reporting channels are implemented. The money laundering officer must be involved in this process and it must be ensured that he or she also monitors and controls compliance with financial sanctions.

Gap analysis unavoidable

Due to the significant changes in content in the area of money laundering prevention, including the scope of the changes introduced by the AML package (571 pages), it is probably essential to carry out a so-called gap analysis. In this analysis, an actual/target survey must be carried out and the need for action to adapt the currently existing workflows and processes must be identified. This gap analysis should, if not already now, at least be requested by auditors in the near future.

Next steps

With the adoption of the compromise texts, the regulatory topics of “money laundering prevention” and “sanctions” will be bundled. A gap analysis of the current regulatory and organisational situation (actual situation) and the future situation (target situation) should be carried out to ensure that the obliged entities recognise this bundling and initiate appropriate organisational steps. Even if the implementation of the AML package in the respective member states will still take some time (3 years), measures for implementation should be taken now. These measures – such as carrying out a gap analysis – are essential for future targeted prevention work (in terms of money laundering and sanctions).

The linking of the topics in the AML package is a milestone in money laundering prevention; however, it requires structural and organisational adjustments in the companies that should not be underestimated.

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