The challenge
Since the entry into force of the revised Money Laundering Act (AMLA) as a result of the 4th EU Money Laundering Directive in 2017, goods traders in particular have been faced with various obligations. Although goods traders are also granted relief if they do not make or receive cash transactions of 10,000 euros or more, companies are not exempt from a careful examination of the extent to which they are subject to individual aspects of the AMLA. This is because traders in goods are in principle obligated parties within the meaning of the AMLA. In addition, exemption regulations must be observed.
A risk-based approach is moving to the centre of money laundering prevention. Obligated persons must implement an effective money laundering-specific risk management system that includes a (possibly group-wide) risk analysis and internal security measures. The risk analysis must be documented, regularly updated and made available to the supervisory authorities. It forms the basis for internal safeguards, the functionality of which must be monitored and updated as necessary. The internal safeguards include principles, procedures and controls for dealing with risks, for fulfilling customer due diligence obligations (i.e. KYC processes), an internal whistleblowing system, the fulfilment of suspicious activity reporting obligations, training and reliability checks of employees as well as record-keeping and retention obligations and the appointment of a money laundering officer for the Group. The security measures based on the risk analysis must also be uniform throughout the group.
The information that the obligated parties must obtain and document internally in the future is also extensive. Among other things, this concerns the type and scope of the economic interest of the beneficial owners. With regard to such information, it is required that it be kept up to date at all times and reported to the transparency register - a considerable effort.
Non-compliance with the obligations will result in drastic sanctions for traders in goods: Fines of up to one million euros or up to twice the economic benefit derived from the violation are foreseen. In addition, there is the threat of public disclosure of the violation and the person responsible for it - a penalty that can be very damaging to reputation and business.
Since 1 January 2020, on the basis of the 5th EU Money Laundering Directive, the requirements for money laundering-related risk management have again increased, in particular also for goods dealers and real estate agents.
Closely related to money laundering and terrorist financing are the challenges related to sanctions and embargoes. Recent reactions to current conflicts show that this topic is highly topical. Just like the global political situation, sanctions and embargoes are subject to constant change. This leads to numerous challenges for companies with an international purchasing and/or sales market. The associated legal risks due to incorrect application, especially in the EU and in or with reference to the USA, must therefore be assessed, monitored and managed in a functioning governance system.
Barbara Scheben
Partner, Audit, Regulatory Advisory, Head of Forensic, Head of Data Protection
KPMG AG Wirtschaftsprüfungsgesellschaft
Alexander Geschonneck
Partner, Forensic, Global Head of Forensic
KPMG AG Wirtschaftsprüfungsgesellschaft
Our performance
When it comes to combating money laundering and terrorist financing, we provide support in risk analysis, identifying business partners, setting up and improving internal safeguards and due diligence measures, and help to uncover and address violations.
With regard to sanctions and embargoes, we support you in designing and implementing preventive processes and measures in your governance system. Furthermore, we assist in the detection and clarification of sanctions and embargo violations, as a result of which we determine responsibilities and derive action measures.
We focus on the following:
Basic analyses
- Initial risk analysis and support in updating
- Target-performance comparison of money laundering-specific risk management
- Recommendations on due diligence and internal security measures
Support in the conception and establishment of processes and measures
- Development of objectives for effective money laundering-specific risk management
- Support in the conception and implementation of risk management, group compliance measures, whistleblower systems and processes for the timely fulfilment of suspicious activity reports and requests for information
- Support in the design of monitoring mechanisms for high-risk business relationships or transactions involving third countries
- Advice on the processing of personal data in the context of prevention, detection and investigation
- Development of a process for reporting to the Transparency Register
- Training courses, work aids and training
- Audit of money laundering-related risk management
- Target setting development and implementation advice regarding the continuous application of all applicable embargo and sanctions lists in the operational processes of the governance system
Identification of business partners (know-your-customer check)
- Consultation of publicly accessible registers
- Comparison with embargo and terror lists
- Clarification of the status as a politically exposed person (PEP)
- Identification and verification of beneficial owners
For this purpose, we use, among others, the efficient software tools K3PID and Astrus, which always obtain and evaluate up-to-date data worldwide.
Detection and clarification of suspicious cases
- Examination of essential documents
- Interviews and forensic data analysis
- Background research to identify problematic interconnections
- Cash flow analyses
- On request, communication and coordination with relevant bodies, authorities and legal advisors
- Recommendations for the establishment of a whistleblower system
- "Look-back analyses" in relation to customer lists, suppliers, business partners and other third parties
- Assessment of potential matches with various sanctions lists
- For complex structures: preparation of an Enhanced Due Diligence (EDD) to outline business relationships and ownership structures.
KPMG Forensic has extensive experience in preventing, detecting, investigating and combating money laundering in companies and public authorities. We work in an interdisciplinary manner and draw on the global network of 2,500 compliance and forensic experts. In this way, you benefit worldwide from our profound understanding of markets, industries and companies. Contact us.
We are there for you around the clock:
KPMG Forensic Emergency Hotline: 0800 SOS KPMG (0800 767 5764).
E-mail: : de-sos@kpmg.com
