What obligations do estate agents have under the Money Laundering Act?

Money laundering - that sounds like organised crime and international crime on a grand scale. However, it is not only global corporations or banks in offshore countries that are affected; money laundering can also take place in Germany when buying or renting property. Money laundering is often complex. Serious offences such as human trafficking, drug trafficking or tax evasion are often no longer clearly identifiable.

What is the Money Laundering Act?

The Anti-Money Laundering Act (AMLA) aims to prevent potential money laundering activities in advance. For this reason, addressees have been identified where there is a fundamental risk that money launderers could take advantage of them. These addressees are referred to as "obliged entities" in the Anti-Money Laundering Act and must take comprehensive precautions.

In Germany, more than one million companies are such "obligated parties".

Many of these companies come from the financial sector, such as banks or FinTechs, and from the insurance sector, such as insurance companies or insurance brokers. But companies from the non-financial sector such as jewellers, car dealers, art dealers and law firms also need to take precautions. Real estate agents are also included.

High risk of money laundering in the property sector

The property sector is affected by a particular risk of money laundering.

The property sector in particular is

-the large sums of money invested and

-relative value stability

a favourite area for money launderers.

What obligations do estate agents have under the Money Laundering Act?

Real estate agents must identify their clients and verify their details. They must also report suspicions of money laundering and terrorist financing.

It is very important to understand that even if a bank and a notary are involved in the property purchase, the estate agent must still make his own assessment and identify the contractual partner. According to the Money Laundering Act, it is therefore not only a question of whether money is received or forwarded. Rather, special knowledge is also relevant. As the estate agent has got to know the buyer, seller, tenant or landlord and has an impression of the overall situation, their assessment is also important.

Brokers must also have a risk management system in place. This is because you can only effectively protect your company against imminent risks if you are aware of them. Risk management consists of two parts: the risk analysis and, building on this, the individual, company or internal security measures against money laundering and terrorist financing.

Consequences for real estate agents in the event of violations

Failure to comply with or violations of the Money Laundering Act can have serious consequences for companies and employees.

For breaches of duty in accordance with the Money Laundering Act, the following can be prosecuted for reckless or intentional violations Fines of up to 150,000 euros can be imposed. Depending on the severity of the offence, the amount of the fine can even be up to 1 million euros.

But it's not just the fines that can be very severe, much more threatening is the Reputational damage. This is because companies can be published for 5 years on a website of the supervisory authority in connection with money laundering. This can have a significant impact on the company's public image and lead to restrictions for contractual partners. The supervisory authorities have already started this "naming and shaming" of some companies.