30 years of the Money Laundering Act - Good luck on your birthday!

The Money Laundering Act is celebrating its 30th anniversary! On 25 October 1993, the first Act on the Tracing of Profits from Serious Crime (Money Laundering Act - GwG) was passed by the Bundestag with the approval of the Bundesrat. To mark the anniversary, we have picked out a few important figures on the Money Laundering Act.

3 legislative changes per year

A lot has happened since then. From its original 17 paragraphs, the Money Laundering Act has grown to 59 paragraphs and 2 annexes. The pace of change has increased considerably over the years. While the Anti-Money Laundering Act was hardly amended until 2008, there were 19 amendments between 2008 and 2017, an average of almost 2 amendments per year. Since 2017, there have been 16 amendments and therefore almost an average of 3 amendments per year (!).

Over 1 million obligated parties

Starting with the involvement of a small number of addressees, particularly from the financial sector, the Money Laundering Act now applies to real estate agents, lawyers, auditors, tax consultants, notaries, traders in goods and many more. A question in the Bundestag reveals that the German government now assumes that there are more than 1 million companies in Germany that could potentially fall under the Money Laundering Act (BT-Drs. 19/23662). Depending on the addressee, there are sometimes extensive requirements such as the implementation of risk management, the realisation of customer due diligence obligations (also known as KYC procedures) and the establishment of a suspicious activity reporting system.

Increasing pressure and high fines

The pressure on obliged entities to implement the Money Laundering Act is also increasing. In 2022, 254 fine proceedings were conducted by BaFin and fines totalling 3,782,000 euros were imposed. 6 special commissioners were appointed in the institutions. The number of fines in the non-financial sector also rose from just under 285,748 euros in 2021 to 550,485 euros in 2022. In some cases, companies are publicly pilloried on the supervisory authorities' websites for violations of the Money Laundering Act.

Harmonised European standards

Looking to the future of money laundering legislation, there will soon be a standardised Europe-wide regulatory framework. In July 2021, the European Commission proposed a comprehensive money laundering package. Negotiations are now underway with the European Council and the European Parliament. A final version is expected soon. The new EU money laundering package will then set out key provisions of the Anti-Money Laundering Act in an EU regulation.