Federal Ministry of Finance publishes draft of new Financial Crime Combating Act (Finanzkriminalitätsbekämpfungsgesetz, FKBG)

I.

Overview of the relevant changes for obliged entities under the Money Laundering Act 

• The circle of obliged entities under the Anti Money Laundering Act shall be extended to include financial holding companies, mixed financial holding companies and insurance holding companies.
• As of January 1, 2024, every entity already obliged under current law must be registered with the GoAML, the FIU's electronic reporting portal. In the future, non-registration of obliged entities with the GoAML will be punishable by a fine (against the background of still very low registration figures). An exception is to apply to traders of goods. The new administrative offense is to apply to them from January 1, 2027.
• Extension of reporting requirements: If an obliged entity files a criminal charge or a demand for prosecution in addition to a suspicious activity report, this must be reported to the FIU when the suspicious activity report is filed.
• Increasing the quality of data in the transparency register:
• Inclusion of the "place of birth" of beneficial owners in the register (mandatory from January 1, 2027, previously voluntary); voluntary transmission of ownership and control structure overviews by associations and legal structures subject to transparency register obligations (from July 1, 2025 at the latest); introduction of authorized persons for reports to the register (from January 1, 2025 at the latest).
• Establishment of a real estate transaction registry within the new Federal Office for Combating Financial Crime (BBF) to increase transparency in the prone real estate sector.
• In addition, a Central Office for Money Laundering Supervision (Zentralstelle für Geldwäscheaufsicht, ZfG) will be established within the BBF to support the coordination and strengthening of supervisory measures under money laundering law nationwide.

II.

"Super money laundering authority": bundling key competencies in the new BBF

The BBF, which will be established on April 1, 2024 under the purview of the German Federal Ministry of Finance, will combine analytical, supervisory and criminal anti-money laundering competencies. This will establish a holistic approach to support the prioritization of anti-money laundering efforts and minimize the current fragmentation. 

"Heart" of the BFF: Money Laundering Investigation Center

The Money Laundering Investigation Center (Ermittlungszentrum Geldwäsche, EZG) is supposed to investigate significant international cases of money laundering with a connection to Germany, starting with suspicious financial flows (and not, as usual, with predicate offenses) in order to get to the crimes behind them ("Follow the Money"). In this way, professional backers and networks shall be tracked down more consistently. In this context, the EZG is to have the same powers of investigation as authorities and police officers under the Code of Criminal Procedure. The existing competencies of the Federal Criminal Police Office (Bundeskriminalamt, BKA), the Customs Investigation Service (Zollfahndungsdienst, ZFD) and the public prosecutors' offices remain unaffected; resources shall be strengthened, and interface cooperation takes place. Modern technologies with a data-centric approach are to enable efficient investigative and supervisory work.

Supervision and administrative investigation: FIU, ZfS, ZfG

The Central Sanctions Enforcement Unit and Financial Intelligence Unit, which are currently subordinated to the General Directorate of Customs (Generalzolldirektion), are to be transferred to the BBF as of June 1, 2025. In the future, the FIU is to pursue a more risk-based approach in its work through more efficient filtering of the reports to be analyzed. In doing so, the FIU may use automated processes; however, risk statements about persons must be made by FIU employees.

In addition, the Central Office for Money Laundering Supervision will be established. The main task of the ZfG will be to coordinate and support the supervisory authorities, whose responsibilities will remain as before. Among other things, the ZfG will prepare, harmonize and update interpretation and application notes on the Anti Money Laundering Act (Auslegungs- und Anwendungshinweise), develop uniform guidelines for supervision in the non-financial sector and, in the process, operate a statistics and reporting system for decentralized supervisory authorities. The ZfG is also to coordinate cooperation with the new EU money laundering authority AMLA for Germany.

A new procedure for investigations of suspicious assets is also to be created for the BFF as a separate legislative proposal.

These structural changes are designed to improve the fight against financial crime in the long term.

III.

Better Registers: The New Real Estate Transaction Register and Higher Data Quality in the Transparency Register

In the future, notaries and courts will be obliged to transmit data resulting from electronic notifications of sale pursuant to Section 18 (1,2) Real Estate Transfer Tax Act (Grunderwerbsteuergesetz, GrEStG), where the purchase price exceeds EUR 20,000, to an electronic real estate transaction register located at the BBF. This is intended to ensure greater transparency. By January 1, 2026 at the latest, the first authorities will be able to retrieve data from the register.

Additional query powers are intended to make it easier to uncover incorrect entries in the transparency register and thus initiate corrections. From January 1, 2025, identity and verification checks are to ensure that only authorized persons can make entries. Incentives are to be provided for organizations subject to registration to disclose their ownership and control structures in the transparency register. The places of birth of beneficial owners will become mandatory information from January 2027.

Further changes in the law

In addition to the law establishing the Federal Financial Crimes Authority and the amendments to the Money Laundering Act, the following laws are also affected, among others:

• The planned amendments to the German Banking Act aim to extend owner controls to financial holding companies and mixed financial holding companies and to introduce money laundering supervision of these companies; an obligation to notify the appointment of auditors and the possibility to appoint annual auditors for these companies will be introduced.
• Amendments to the Financial Services Act also extend money laundering supervision to financial holding companies.
• The Audit Report Ordinance will contain supplementary provisions for financial holding companies and mixed financial holding companies.

IV.

Conclusion for obliged entities

Most of the changes in the draft law to improve the fight against financial crime concern the new BBF and the transparency register. Finally, the following points will be of importance for obliged entities:

• Criminal charges and demands for prosecution in addition to a suspicious activity report must be reported to the FIU.
• In the future, the FIU is to have the option of creating a negative catalog (circumstances that do not trigger a reporting obligation).
• In the future, consent to transactions in deadline cases must only be obtained from the FIU - previously, consent could also be obtained from the public prosecutor's office.
• A prohibition, subject to a fine, is introduced on informing contractual partners, clients or other third parties of investigative measures taken by the Central Sanctions Enforcement Office.

_{Published: October 2023}