BaFin pulls back on plans to modify administrative practices on video identification – Circular 04/2016 (GW) suspended until 31 December 2016

Circular on video identification is suspended

Germany’s Federal Financial Supervisory Authority (BaFin) announced yesterday that the requirements in Circular 04/2016 (GW) on video identification would be suspended until 31 December 2016, and that the old 01/2014 would continued to apply until that time. According to the BaFin, the decision was taken so as to give market participants more time to adjust to the higher security standards.

What’s the (real) motivation?

I doubt the real reason for the suspension of Circular 04/2016 (GW) is solely to give market participants a reasonable transitional period; if the BaFin had wanted to do this, it could simply have specified an appropriate timeframe in the original Circular. In my view there is strong indication that the BaFin will give the Circular a complete overhaul, since it includes a number of legally contestable points (see my opinion on Circular 04/2016 (GW). I base this conclusion on what the BaFin announced in its statement: as the implementation of the Fourth Money Laundering Directive takes shape (the Cabinet draft is due for yearend), the BaFin wishes to propose a forward-looking response to the legislator that addresses these points:

  • What are the data security and digital transformation challenges inherent in all types of customer identification procedure?
  • Which general security standards are to be defined?
  • Which procedures for secure customer identification can be used pursuant to the Money Laundering Act by obligated entities in the financial sector and also by non-finance organizations?


I doubt the suspension of Circular 04/2016 will stop at 31 December 2016. The interim time will inevitably be too short to enact the proposals outlined by BaFin. Furthermore, the market will need a reasonable transitional period in order to take the proposals into practice.


For the time being, therefore, no change to BaFin’s administrative practices.

To be continued…

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