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White-collar defense · Kiel, Germany

Defending AML and compliance officers

You hold a compliance function at an institution operating in Germany, and a letter has arrived from the supervisory authority or from the public prosecutor's office. Over the same events a supervisory matter, an administrative-fine proceeding and a criminal investigation can run at the same time. Each of them asks a different question, and what you owe the authority writing to you differs with each.

Three proceedings over the same events

The supervisory authority supervises the obligated entity. § 51 Abs. 2 Satz 1 GwG lets it take the measures and orders needed to ensure that the requirements of the Act are met, and under Satz 4 an objection or an action against such a measure has no suspensive effect.

The duty to cooperate does not stop at the institution. § 52 Abs. 1 Satz 1 GwG names the obligated entity, the members of its governing bodies and its employees, but toward the BaFin it binds them only in so far as its supervision concerns the obligated entities named in § 50 Nr. 1 Buchst. g and h GwG; beside that it binds them toward the authorities named in § 50 Nr. 3 to 9 GwG. A credit institution falls under § 50 Nr. 1 Buchst. a GwG, so for its people the duty stands in § 44 Abs. 1 Satz 1 KWG, which names the same three groups.

The administrative-fine proceeding is a separate track. A breach under § 56 GwG is an Ordnungswidrigkeit, a regulatory offense rather than a criminal one, and a fine imposed for it is not a criminal conviction. The criminal investigation asks something else: whether you yourself fulfilled § 261 StGB. Where one act is at the same time a criminal offense and a regulatory offense, § 21 Abs. 1 Satz 1 OWiG applies the criminal statute alone. Under Absatz 2 the act may still be sanctioned as a regulatory offense where no penalty is imposed. The end of the criminal case is therefore not by itself the end of the fine.

On this page: how the supervisory, fine and criminal proceedings run apart, who counts as an obligated entity and what that means for you personally, the tiers of § 56 GwG, the report and the prohibition on tipping off, and how I run the defense.

Who the obligated entity is, and what that means for you

§ 2 Abs. 1 GwG lists who is an obligated entity, and only in so far as they act in the exercise of their trade or profession. Nummer 1 names credit institutions within the meaning of § 1 Abs. 1 KWG. What Nummer 1 names is the institution, not the person employed by it. Other numbers of the list do name natural persons, among them lawyers, tax advisers and real estate agents, but not the employee of a credit institution.

That matters because of § 261 Abs. 4 StGB. Whoever commits an act under Absatz 1 or Absatz 2 as an obligated entity under § 2 GwG is punished with imprisonment from three months to five years. The basic range of § 261 Abs. 1 Satz 1 StGB runs up to five years or a fine; Absatz 4 removes the fine and sets a minimum.

Whether it reaches the individual is open, and the wording does not settle it. § 14 StGB carries over a law under which special personal characteristics establish criminal liability. Absatz 4 is written with a sentencing range of its own, in the form the Code uses for a separate offense, and not in the form of Absatz 5 Satz 1, which is drafted as a sentencing rule. Whether the status of obligated entity is therefore a characteristic that establishes criminal liability within the meaning of § 14 StGB, or one that only aggravates it, is the point to be fought out in the proceedings.

What the institution says is not your statement The house answers for itself, and its interest in closing the supervisory file need not match yours. I read anything the house drafts for you before you sign it.
Money laundering proceedings in Germany

The fine under § 56 GwG

§ 56 Abs. 1 GwG lists in a long catalogue the duties whose breach is a regulatory offense. Only intentional or leichtfertig conduct is covered there; ordinary negligence is not enough. Leichtfertigkeit is a heightened form of negligence in German law, not the recklessness of the common law, which carries an awareness of the risk. Satz 2 sets the amount at up to 150,000 euros for intentional conduct and up to 100,000 euros otherwise.

Absatz 2 has its own short catalogue and a lower threshold, because negligent conduct already suffices there. Satz 2 therefore names three amounts: up to 150,000 euros for intentional conduct, up to 100,000 euros for leichtfertig conduct and up to 50,000 euros otherwise. Absatz 2a covers breaches of Regulation (EU) 2023/1113 and allows up to 200,000 euros.

Which number the authority applies decides the rest: a report not made, not made correctly, not made completely or not made in time sits in § 56 Abs. 1 Nr. 69 GwG, a money laundering reporting officer or deputy not appointed in § 56 Abs. 2 Nr. 2 GwG.

Above these sits Absatz 3: for a breach under Absatz 1, and for an intentional or leichtfertig breach under Absatz 2 or 2a, a fine of up to one million euros or up to twice the economic benefit derived from the breach, and only where the breach is serious, repeated or systematic. Satz 3 and Satz 4 go higher still against obligated entities under § 2 Abs. 1 Nr. 1 to 3 and 6 to 9 GwG that are legal persons or associations of persons, up to the higher of five million euros and 10 percent of total turnover; Satz 5 allows up to five million euros against such an obligated entity that is itself a natural person.

An employee is not an obligated entity. Whether a fine under the Geldwäschegesetz reaches him personally runs through § 9 Abs. 1 and 2 OWiG and, where several take part, through § 14 Abs. 1 Satz 1 und 2 OWiG, and what your letter of appointment says decides a good deal.

The report and the prohibition on tipping off

§ 43 Abs. 1 GwG makes the report a duty of the obligated entity. It arises where facts indicate that an asset connected with a business relationship, a brokerage transaction or a transaction stems from a criminal act capable of being a predicate offense of money laundering, that a business transaction, a transaction or an asset is connected with terrorist financing, or that the contracting party has not complied with its duty under § 11 Abs. 6 Satz 3 GwG to disclose to the obligated entity whether it wishes to establish, continue or carry out the business relationship or the transaction for a beneficial owner. The report goes to the Financial Intelligence Unit without undue delay, irrespective of the value involved.

§ 47 Abs. 1 GwG then closes the mouth, and a breach is a regulatory offense under § 56 Abs. 2 Nr. 7 GwG, a catalogue that already covers negligent conduct. The addressee of the prohibition is once again the obligated entity.

Under § 7 Abs. 5 Satz 6 GwG the money laundering reporting officer is not subject to the management's right to issue instructions in so far as he intends to submit a report under § 43 Abs. 1 GwG or answers a request for information from the Financial Intelligence Unit under § 30 Abs. 3 GwG.

The exceptions are narrower than the prohibition § 47 Abs. 2 Satz 1 Nr. 1 GwG takes information passed to state authorities out of the prohibition; the further numbers permit an exchange only within the groups they name: between obligated entities of the categories listed there, and under Nummer 3 between a parent undertaking and its branches and group companies established in third countries and subject to anti-money-laundering duties there.

When a supervisory matter turns into a criminal case

§ 41 Abs. 1 OWiG marks the moment: the administrative authority hands the matter to the public prosecutor's office where there are indications that the act is a criminal offense.

The prosecutor then examines § 261 StGB, and for this group Absatz 6 most often carries the accusation. Satz 1 threatens imprisonment of up to two years or a fine for a person who, in the cases of Absatz 1 or 2, leichtfertig fails to recognize that the object is one falling under Absatz 1. Absatz 6 concerns the failure to recognize the origin alone; the remaining elements of whichever Nummer of Absatz 1 is in play must be present beside it. Its wording presupposes that the person did not recognize the origin at all.

Alongside this runs § 130 Abs. 1 OWiG. Whoever, as the owner of a business or undertaking, intentionally or negligently omits the supervisory measures required to prevent contraventions within that business of duties incumbent on the owner whose breach carries a criminal penalty or a fine, commits a regulatory offense where such a contravention is committed that proper supervision would have prevented or made substantially more difficult. Satz 2 counts the appointment, careful selection and monitoring of supervisory personnel among those measures, and where the breach of duty carries a criminal penalty, Absatz 3 Satz 1 allows a fine of up to one million euros.

Searches, seizure and arrest: your rights in the first hours

How I run the defense

The first question is in what capacity you are being addressed: a witness, the person a fine proceeding is directed against and a suspect in a criminal investigation owe different things to the authority writing to them.

Once that is settled I apply for access to the file and read which provision is being applied to you, and what the investigators infer intent or Leichtfertigkeit from. Then I ask for what existed at the time the matter was handled: the customer's statements, the hits from the monitoring system, the memos and system entries carrying a date, and your letter of appointment. Only after that does a statement come into question, and I discuss it with you before anything goes to the file.

I do not take on every question around this one. I do not advise on building or repairing a compliance system, on the law of any country other than Germany, on tax or on employment law. A warning, a termination or a termination agreement is a separate mandate; I run it together with colleagues from employment law while I keep the defense and coordinate what is said in both proceedings.

I work in English, and the seat of the institution does not decide whether I take the case. What a defense costs is set out on the fees page.

Send me the letter before you answer it Tell me who wrote to you, in what capacity and what deadline the letter sets: +49 171 4075758. The first assessment costs you nothing.

Common questions from AML and compliance officers

The supervisory authority has asked for information. Do I have to answer?
In principle yes, and the duty does not stop at the institution. § 52 Abs. 1 Satz 1 GwG names the obligated entity, the members of its governing bodies and its employees, but toward the BaFin it binds them only in so far as its supervision concerns the obligated entities named in § 50 Nr. 1 Buchst. g and h GwG; beside that it binds them toward the authorities named in § 50 Nr. 3 to 9 GwG. A credit institution falls under § 50 Nr. 1 Buchst. a GwG, so for its people the duty stands in § 44 Abs. 1 Satz 1 KWG, which names the same three groups. Both provisions set the same limit. Under § 52 Abs. 4 GwG and § 44 Abs. 9 KWG you may refuse to answer questions whose answer would expose you, or a relative within the meaning of § 383 Abs. 1 Nr. 1 to 3 ZPO, to the risk of criminal prosecution or of proceedings under the Act on Regulatory Offenses. By their wording both cover the answer to a question; neither mentions the production of documents. Which provision the authority is relying on is therefore worth settling before the first answer.
Am I personally liable, or is it the institution?
Both can be addressed, by different provisions. § 2 Abs. 1 Nr. 1 GwG names credit institutions within the meaning of § 1 Abs. 1 KWG, so the obligated entity under the Geldwäschegesetz is the institution and not the person employed by it. A fine under § 56 GwG can reach someone who is not himself an obligated entity on two routes. § 9 Abs. 1 OWiG applies a law making special personal characteristics the basis for the possibility of a sanction to a body authorized to represent a legal person, to a member of such a body and to the further representatives named there; § 9 Abs. 2 OWiG applies it to a person commissioned to manage the business in whole or in part, or expressly commissioned to perform duties of the owner of the business on his own responsibility and acting on the basis of that commission. Under § 14 Abs. 1 Satz 1 OWiG, where several take part in a regulatory offense each of them commits one; Satz 2 adds that this holds even where the special personal characteristics are present in only one of them. A charge under § 261 StGB is a separate matter: it attaches to what you yourself knew and did.
Does the sentencing range of § 261 Abs. 4 StGB apply to me personally?
That is open, and the wording does not settle it. Absatz 4 threatens imprisonment from three months to five years for a person who commits an act under Absatz 1 or Absatz 2 as an obligated entity under § 2 GwG, and § 2 Abs. 1 Nr. 1 GwG names the institution rather than the person employed by it. § 14 StGB carries over a law under which special personal characteristics establish criminal liability. Absatz 4 is written with a sentencing range of its own, in the form the Code uses for a separate offense, and not in the form of Absatz 5 Satz 1, which is drafted as a sentencing rule. Whether the status of obligated entity is therefore a characteristic that establishes criminal liability within the meaning of § 14 StGB, or one that only aggravates it, is the point to be fought out in the proceedings.
I filed a suspicious activity report. May I tell my client?
No. Under § 47 Abs. 1 GwG an obligated entity may not inform the contracting party, the person instructing the transaction or other third parties of an intended or submitted report under § 43 Abs. 1 GwG, of an investigation opened on the basis of such a report, or of a request for information under § 30 Abs. 3 Satz 1 GwG. Absatz 2 Satz 1 Nr. 1 takes information passed to state authorities out of the prohibition; the further numbers permit an exchange only within the groups they name: between obligated entities of the categories listed there, and under Nummer 3 between a parent undertaking and its branches and group companies established in third countries and subject to anti-money-laundering duties there, each only under the conditions set out there. A breach is a regulatory offense under § 56 Abs. 2 Nr. 7 GwG, and that catalogue already covers negligent conduct.
Will a fine against me be published?
§ 57 Abs. 1 Satz 1 GwG obliges the competent supervisory and administrative authorities to publish on their website measures that have become final and fine decisions that are no longer open to challenge, after notifying the addressee. Satz 3 requires the nature and character of the breach and the natural and legal persons responsible for it to be named, and under Absatz 4 Satz 1 the publication must remain online for five years. Absatz 2 Satz 1 requires it to be deferred for as long as it would violate the personality rights of natural persons or the publication of personal data would be disproportionate for other reasons, would endanger the stability of the financial markets or would endanger ongoing investigations; Satz 2 allows anonymized publication instead where that gives effective protection under Satz 1 Nummer 1. Under Absatz 3 the publication must not take place at all where the measures under Absatz 2 are not sufficient to rule out a danger to financial market stability or to make the publication proportionate. The duty attaches to finality, so it does not arise while the fine notice is still under challenge.
Further reading

Writing instead of calling

Not every accusation is easy to say out loud on the phone. If writing comes easier to you, use this field. What you send me is covered by my duty of confidentiality from the first word.

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