Account blocking after suspected money laundering report

Facts of the case

The facts of the judgement concerned a Turkish national who was a customer of a German commercial bank. In August 2022, the bank reported a deposit of €21,900 from Turkey to the FIU as part of a suspected money laundering report. The customer did not provide any proof of the deposit (this was a property sale). The bank then cancelled the customer's account without giving any reasons, blocked it and also filed a "deadline follow-up report" due to subsequent direct debit collections.

The customer objected to the account freeze. After the block was lifted, the parties declared the legal dispute settled. The Frankfurt am Main District Court ordered the customer to pay the costs of the proceedings as the three-day period had not been exceeded. The customer lodged an immediate appeal, which had to be decided by the Frankfurt am Main Regional Court.

Decision of the Regional Court of Frankfurt am Main

The Frankfurt am Main Regional Court ordered the bank to pay the costs of the proceedings. The court based its decision on the fact that maintaining the account freeze beyond the three-day deadline of Section 46 (1) sentence 1 no. 2 GwG was unlawful. This also applied even though the submission of a suspicious activity report was justified in itself.

The bank was also unable to invoke the exemption from liability pursuant to Section 48 GwG, as this only applies to lawful behaviour. In the opinion of the court, a teleological reduction of the exemption from liability was necessary, as the unlawful blanket blocking of the account violated the regulatory context of the AMLA.

Problem areas of § 46 GwG

Lack of basis for account transaction blocks

The court found that Section 46 (1) GwG is not suitable as a legal basis for a blanket block on account transactions, as the standard refers specifically to a suspicious transaction and not to the entire account. The possibility of blocking the entire account due to generally conspicuous behaviour has no legal basis. A blanket block on account transactions would also mean a considerable encroachment on fundamental rights, as the threshold for submitting a suspicious activity report is very low and would have a massive impact on those affected. The court also sees constitutional concerns here, without elaborating further.

It emphasises that a suspicious transaction report that has not been prohibited within three working days should no longer justify an account freeze. According to our experts, this would mean that a continued account freeze could have a similar effect to an asset freeze. This would be problematic given the low requirements for a suspicious activity report. According to the court, the law is therefore only aimed at blocking the specific suspicious transaction for a limited period of time and not the entire account.

Three-day deadline as maximum period

Accordingly, the Regional Court of Frankfurt aM interprets Section 46 para. 1 sentence 1 no. 2 GwG to mean that a transaction must be carried out within three working days at the latest - i.e. the bank must regularly carry out the transaction. must. This contradicts the wording of the law ("at the earliest"). BaFin also understands the three-day period as a minimum period after which a proportionality check by the obligor is required before the transaction is executed. The Regional Court of Frankfurt aM rejects such a review as it is not provided for in the legal text. Rather, it understands the deadline as a maximum deadline.

Original and subsequent transactions

Furthermore, the court does not consider the transactions in the subsequent notification to trigger the deadline again in accordance with Section 46 (1) AMLA, but only the original transaction (here: the potentially incriminated deposit). Otherwise, the account would be blocked indefinitely. However, the court recognises that subsequent transactions can be independent cases of suspected money laundering.

The court does not address a possible overall contamination of the account through the incriminated deposit, nor does it address possible criminal liability for reckless money laundering in accordance with Section 261 (6) of the German Criminal Code (StGB). This is because the execution of a transaction in which money laundering should be obvious to everyone is itself punishable by law - even after the expiry of the time limit in Section 46 (1) GwG. The execution of subsequent transactions could therefore constitute reckless money laundering. This problem was not addressed.

Conclusion

In the opinion of the court, obliged entities should not impose complete and week-long account freezes in accordance with Section 46 AMLA. According to the court, transactions on the basis of which a suspicious activity report was submitted should generally be carried out promptly after the three-day period has expired.

However, uncertainties remain: This is because this contradicts the view of BaFin, which sees the deadline as a minimum period. In addition, it should also be possible to stop transactions on the basis of which an additional deadline notification is submitted, even beyond the three-day deadline, if these give rise to suspicion. It must also be possible to hold all transactions that could result in criminal liability for reckless money laundering for longer than three days - because nothing punishable can be demanded. Prompt legal clarification would be desirable.