Germany

1. Does Germany have legislation making it a criminal offence to engage in money laundering and/or terrorist financing?

Money laundering is prohibited pursuant to Section 261 of the German Criminal Code (StGB) and terrorist financing is prohibited pursuant to Section 89c StGB.

2. To whom does the legislation apply?

The legislation applies to everyone, if the criminal offence committed falls within the territorial reach of the StGB (see question 7).

3. What does the legislation prohibit?

Money laundering according to Section 261 StGB comprises the following:

• money and/or other assets that are the proceeds of a criminal offence;
• are intentionally concealed, disguised, procured (either for the offender himself or for a third party), used by the offender or their origin, or tracing or confiscation was thwarted or endangered by the offender;
• and the offender is aware that the assets are the proceeds of an offence and acts with intent in regards to the above.

Section 89c StGB prohibits the financing of terrorism. In overview, Section 89c StGB makes it a criminal offence to collect, accept or provide assets in the knowledge or with the intention that these are to be used by another person for the purpose of committing a predicate offence defined in Section 89c Subsection 1 no. 1 to no. 8 StGB.

4. How is money laundering defined? Does underlying criminal activity have to be proven?

Money laundering is the means by which illegally obtained funds are fed into the legal economic system.

It must be established to the conviction of the court that the object of the offence stems from a predicate offence. It is not necessary to actually prove underlying criminal activity that is a certain predicate offence. Rather, it is sufficient to prove that facts exist which show that a constituent and unlawful predicate offence was committed.

While according to the former legal framework only certain criminal offences could qualify for a predicate offence, the law was amended at the beginning of 2021 to the effect that every criminal offence potentially can qualify as predicate offence (so-called “all crimes approach”).

5. What level of intent or knowledge is required to establish a violation?

Regarding money laundering, it is a criminal offence if the offender is acting with intent. Further, according to Section 261 Subsection 6, it is also a criminal offence if the offender is recklessly unaware of the fact that the object is derived from an unlawful act. For committing an offence pursuant to Section 89c StGB, the offender has to act with intent.

6. What are the potential penalties for infringing the legislation?

Money laundering is punishable by imprisonment for a term of up to five years. In especially serious cases, the penalty is imprisonment for a term between six months and ten years. Such especially serious cases typically occur where the offender acts on a commercial basis or as a member of a gang whose purpose is the continued commission of money laundering.

Financing of terrorism is punishable with imprisonment between six months and ten years; if the assets of the offence are of minor value, financing of terrorism is punishable with imprisonment between three months and five years.

7. Does the legislation have extra-territorial reach?

In general, German Criminal Law is applicable if the criminal offence was committed on German territory (Sections 3, 9 StGB) or on an aircraft/ship operating under the German flag (Sections 4, 9 StGB). Crimes committed abroad are only punishable:

• if the criminal offence concerns internationally protected legal interest listed in Section 6 StGB (e.g. crimes involving nuclear energy), or
• if the victim is a German citizen and the act is a criminal offence at the place of its commission or if that place is not subject to any criminal law jurisdiction (Section 7 Subsection 1 StGB), or
• if the offender was a German citizen at the time of the offence or became a German citizen after committing the offense (Section 7 Subsection 2 No. 1 StGB), or
• if the offender was a foreign national at the time of the commission of the offense, is present in Germany and, although extradition law would permit extradition for such an offence, is not extradited because a request for extradition is not made within a reasonable time, is refused or extradition is not feasible (Section 7 Subsection 2 No. 2 StGB).

Money laundering and financing of terrorism furthermore have special extra-territorial regulations.

Money laundering of objects derived from an offence committed abroad may suffice to constitute a predicate offence if the offence is also punishable at the place of its commission or if the act is to be punishable under specific European Union rules and conventions, Section 261 Subsection 9 StGB.

Financing of terrorism may also be punishable if the offence is committed abroad. If the offence is committed outside the Member States of the European Union, this only applies if the offender is a German national or a foreign national whose livelihood is based in Germany, or the financed offence is to be committed in Germany or against a German national. Prosecution in these cases may require authorisation by the Federal Ministry of Justice and Consumer Protection (Section 89c Subsections 3, 4 StGB).

8. Are there additional anti-money laundering or counter terrorist financing regulations or obligations, such as registration or reporting obligations, for businesses or individuals that operate in particular sectors or undertake particular activities?

The German Anti Money Laundering Act (GwG) and in part the German Banking Act (KWG) set out a series of obligations for entities subject to these rules (e.g. financial institutions, traders in goods).

Obligations include a risk analysis, identification of clients and periodically monitoring business relationships. Furthermore obliged entities have to report suspicious cases to the Financial Intelligence Unit (FIU).

9. What are the potential penalties for failing to comply with these obligations?

Failure to comply with these regulations may result in fines imposed on individuals or corporate entities.

Failure to comply with certain obligations of the GwG might result in a fine of up to 150.000 Euros, however, for systematic and severe violations fines my rise up to five million Euros or 10 % of the previous year’s revenue. Failure to comply with regulations set out by KWG might in certain circumstances even lead to the imposition of a fine of up to twenty million Euros.

Additionally to the individual fine imposed according to Section 30 of the Act on Regulatory Offences (OWiG) a legal entity can be fined if e.g. someone acts as a chairman of the executive committee or other representative of this legal entity and has committed a criminal offence or a regulatory offence as a result of which duties incumbent in the legal person or on the association of person have been violated.

10. Who are the relevant enforcement authorities in Germany and what are their contact details?

The criminal offences of money laundering and financing of terrorism are prosecuted by the competent Public Prosecution Office. Infringements of GwG merely constituting administrative offences are pursued by government administration bodies on district level. Enforcement of KWG is within the competence of the Federal Agency for Financial Services Supervision (BaFin).