It is a central obligation according to the GwG that you must know, who you are doing business with. For this purpose, you must not only identify your customers but also check, if the details they have provided are correct.
bq. You must always make sure to “know your customer”!
The following general due diligence requirements must be observed:
- identifying your contract partner or, if applicable, the person representing them, including verifying, whether this person is authorised,
- verifying, whether the contract partner is acting on behalf of a beneficial owner and, if applicable, determining and identifying the beneficial owner,
- gathering and assessing information about the purpose of the intended business relationship,
- determining, whether the contract partner of the beneficial owner is a politically exposed person, and
- continuous monitoring of the business relationship.
The specific scope of such customer due diligence requirements must be in line with the respective money laundering risk in relation to the contract partner, the business relationship or the transaction. Deviations from the general due diligence duties can therefore arise in areas in which a lower or higher risk of money laundering is to be expected. This means that simplified or enhanced due diligence requirements may apply according to the risk-based approach specified in the new GwG. This can be reviewed by the supervisory authority.
If you are unable to comply with the due diligence requirements indicated above (§ 10 subsection 1 no. 1 to 4 GwG), you must not establish or continue the business relationship or conclude the transaction, and any existing business relations must be terminated. Any violations are punishable by a fine.
The types of business transactions for which due diligence requirements may need to be fulfilled, can vary between different companies and groups of obliged entities:
- establishment of a business relationship,
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goods transactions (except precious metals) for which cash payments of at least EUR 10,000 are made or accepted by the obliged entity itself or via third parties,
- transactions concerning precious metals, for which cash payments of at least EUR 2,000 are made or accepted by the obliged entity itself or via third parties.
- Transactions amounting to at least EUR 10,000 for art objects, paid in cash or cash-free, applicable to goods traders, as well as art agents and art store keepers.
- Serious interest signalled by a contracting party when arranging for real estate purchasing contracts, regardless of the payment mode.
- When organising or brokering bets with a stake or profit of EUR 2,000, regardless of the payment mode.
- Regular monitoring of an ongoing business relationship or in the event of significant changes to the business partner’s details.
- Further reasons (this is not an exhaustive list).