New challenges – comprehensive legislative changes and projects in connection with the transparency register

In addition, the EU Commission presented a package of four legislative proposals on July 20, 2021. The legislative proposals are intended to further strengthen the EU’s anti-money laundering and counterterrorist financing rules.

What does the Transparency Register and Financial Information Act on Money Laundering provide?

The amendment provides for a conversion of the transparency register from a collection register to a full register as of August 1, 2021. Previously, the transparency register only contained data that was not already available in other registers, such as the commercial register. This was enshrined into law by Section 20 (2) GwG (“notification fiction”). Since the notification fiction led to inconsistencies within the EU, it was therefore be discontinued as of August 1, 2021.

This results in all companies now being required to not only identify their beneficial owner(s), but also to actively provide notification to the transparency register for registration. The companies themselves are responsible for keeping their data correct and up-to-date.

From now on, mandatory data also includes the place of birth and all nationalities (Section 19 (1) GwG, as amended). In addition, foreign associations are required to make entries if shares in a company with property within the meaning of Section 1 of the German Real Estate Transfer Tax Act (GrEStG) are transferred to them (Section 20 (1) sentence 2 of the GwG, as amended).

It is also planned to link the existing national transparency registers of the individual EU member states across the EU by introducing an electronic European platform (European Transparency Register). The adoption of the corresponding implementing provision by the European Commission and the start of the gradual implementation of networking is expected before the end of 2021. However, an exact date is not yet known.

What is the cut-off date for the notification of the beneficial owner(s)?

The transitional periods for the notification obligation concerning registration are regulated in Section 59 (7) GwG, as amended, as follows:

• Stock company (AG), SE, limited partnerships by shares (KGaA), until March 31, 2022
• Limited liability company (GmbH), partner companies (Partnerschaftsgesellschaft), cooperatives (Genossenschaften), European cooperatives (Europäische Genossenschaften) until June 30, 2022
• In all other cases until December 31, 2022

What will happen to your company in the event of a breach of the notification obligation?

If a company does not comply with the notification obligation by the date relevant to it, it commits an administrative offense and must expect to be fined in accordance with Section 56 (1) No. 54 et seq. GwG. In the case of reckless violations, fines of up to €100,000 may be imposed; in the case of more serious violations, fines of up to €1 million or twice the benefit derived from the violation may be imposed.

Furthermore, the fines imposed, and their addressees are published on the website of the German Federal Office of Administration. The list is freely accessible and can be viewed at the following link.

Legislative proposals of the Commission dated July 20, 2021

The legislative package presented by the EU Commission, which is intended to modernize and standardize the existing EU system for combating money laundering and terrorist financing, consists of four legislative proposals that address the following issues:

1. A new EU Anti-Money Laundering Authority (AMLA) is to be established. The task of this authority will be to support the financial intelligence units (FIU), to improve cooperation between the units and to coordinate the work of the national authorities. In the opinion of the EU Commission, such a central coordinating body is indispensable for a functioning system to combat money laundering and terrorist financing, so that AMLA will take over or assume this function in the future.

2. The rules for combating money laundering and terrorist financing are to be harmonized throughout the EU. A uniform set of EU rules is to be created and a regulation instated alongside the Money Laundering Directive.

3. The Commission is also aiming for an EU-wide cash ceiling of €10,000. Exceptions to this are to be made for example, for private individuals buying used cars and for people without a bank account. The background to the cash ceiling is that cash payments are difficult to detect and can therefore be a suitable means for money laundering.

The legislative proposals presented by the EU Commission on July 20, 2021 will now be discussed in the European Parliament and the Council. It remains to be seen whether and to what extent the Parliament and the Council will follow the Commission’s proposal. The Commission will be interested in a speedy legislative process in order to be able to start implementation and ensure uniform anti-money laundering operations throughout the EU as quickly as possible.

How can we help you?

We provide support and advice on all issues and challenges related to money laundering and terrorist financing, as well as on all issues related to the transparency register. In particular, we will gladly take over the determination and identification of your beneficial owner(s) in order to be able to prevent fines on the part of the German Federal Office of Administration even before they are imposed.

In addition, we are happy to train you and your company in topics related to money laundering law andoffer workshops fully tailored to your needs.

If you are interested in this or if you have any further questions or need more information, just contact us.