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Money Laundering Prevention: What the 6th Anti Money Laundering Directive means for companies

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The Money Laundering Act (GWG) not only obliges banks, financial service providers, lawyers, notaries, auditors, tax consultants, casinos and real estate agents to implement it. Goods dealers must also take measures to prevent money laundering and terrorist financing. What you should definitely pay attention to now.

Money laundering is a billion-euro business: according to estimations by the United Nations Office on Drugs and Crime (UNODC), it accounts for between two and five per cent of global GDP1. This corresponds to a value of between 800 billion and 2 trillion US dollars every year. The International Monetary Fund (IMF) estimates that the annual volume of global money laundering is as high as 4 trillion dollars.

However, anyone who believes that tax havens such as Panama or Switzerland are solely responsible for this is on the wrong track. Germany is also a real paradise for money laundering: a study on unreported crime revealed that illegally acquired funds totaling around 100 billion euros are converted into officially registered currency there every year. In the pandemic year of 2020, the anti-money laundering unit of the German Central Customs Authority also received a record number of suspect notifications. According to the Central Customs Authority, the total number of reports submitted to the Financial Intelligence Unit (FIU) rose by around one-quarter to approximately 144,000.

The German Federal Court of Auditors (Bundesrechnungshof) believes that Germany is primarily an attractive destination for money launderers because the statutory requirements for combating money laundering are not sufficiently met there. And the situation is not much better in other European countries – in Austria, for example, the number of suspect notifications hit a new record in 2019. Just under seven million euros were seized due to suspect notifications or in connection with crimes relating to money laundering.

The other EU member states are also having a difficult time in the fight against dirty financial transactions. Partly because of this, in the summer of 2021 the European Court of Auditors once again criticised the lack of a uniform strategy for preventing and combating money laundering and terrorist financing. In order to improve this, the European Union (EU) has passed a series of new money laundering regulations over the last few years. As such, the 6th EU Anti Money Laundering Directive (AMLD) entered into force in the EU member states in December 2020, with the objective of intensifying the focus of law enforcement authorities on money laundering.

Whitepaper: Ignorance is not a defence
 

In this white paper, you can find out what consequences the 6th EU Money Laundering Directive will have for companies in all sectors and what you should pay attention to now.

Whitepaper - Unwissenheit schützt vor Strafe nicht

Three questions on money laundering prevention to…

... Carsten Ettmann, Senior Business Consultant for Risk & Compliance at Dun & Bradstreet

Why do companies struggle to combat money laundering?

Carsten Ettmann: It’s simple: anyone who is looking to launder money does not generally shout it from the rooftops. On the contrary, they will do everything they can to stay under the radar. Money launderers use various techniques for this. For example, “smurfing” involves splitting illegally acquired money into small amounts and distributing them over many accounts, while money launderers taking a “structuring” approach to invest illegal funds in luxury goods such as valuable cars or paintings, export them and sell them again abroad. As a result, it is highly difficult to identify dirty money.

What can companies do to stop money laundering?

Carsten Ettmann: They should examine their business partners – carefully, and before each business transaction. Just being able to name the company address and legal representatives is not enough. To find out who the beneficial owner of the company is, ownership structures and company links must be traced right down to the tiniest detail. This is a challenging task, especially when it comes to complex corporate structures. The legally compliant verification of even a single business partner can therefore be incredibly time-consuming. Because high-value goods dealers generally serve a large number of customers, manual checks are thus quickly pushed to their limits.

How can this problem be solved?

Carsten Ettmann: Using powerful technology. For example, our web-based solution D&B Onboard allows corporate links and beneficial owners to be identified in an instant, as well as revealing complex ownership structures and participations in a transparent way. The application also compares company data with other relevant regulatory elements such as sanctions and PEP lists. This provides additional security and helps permanently reduce potential risks when collaborating with business partners, thereby preparing the ground for systematic compliancebased risk management in the area of finance.