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May 2017
Why retailers can become a target for criminals, what they should pay attention to when customers want to pay with large amounts of cash, and what changes the new anti-money laundering directive will bring.
If a customer wants to pay with a stack of hundred-euro bills, which they're carrying around in a plastic bag, it's obvious that something fishy is going on. However, money laundering is rarely that obvious. The issue no longer affects only the financial sector. The stricter banking regulations become, the more organized crime attempts to introduce illegal money into the economic and financial system through trading.
The reputation of cash has been ruined. Not only that, but these criminal activities create extra work for company bosses, as they are legally obligated to be vigilant and report violations. The Money Laundering Act (GwG) requires companies that sell goods to end customers to adhere to certain due diligence obligations in their dealings with customers and obligates them to implement internal security measures, such as employee training.
For businesses that sell their goods to end consumers, this means they should first check whether they are affected by the Money Laundering Act. If so, they are subject to so-called "duties of cooperation" in their business transactions. This particularly affects businesses that often deal with large amounts of cash. Documentation sheet for customer identification
Not only car dealers, but also watchmakers, jewelers, and providers of premium consumer electronics could be considered targets for money laundering. This topic is particularly relevant for businesses in the automotive trade: "Since cash transactions often occur during vehicle sales, businesses must be well-versed in the provisions of the Money Laundering Act," emphasizes Claudia Weiler, press officer at the Central Association of the German Automotive Industry (ZDK).
State regulatory authorities are responsible for inspections of car dealerships and jewelers. If on-site investigators discover a violation of the GwG, the consequences can be very costly. Companies face fines, which in extreme cases can amount to up to 100.000 euros. Therefore, it is important that dealers raise awareness among their employees about the issue.
What must the merchant or their salesperson do? In certain cases, they must identify their customers or contractual partners, i.e., record their data. This currently applies especially to any cash acceptance of €15.000 or more. In June 2017 The 4th EU Money Laundering Directive is set to come into force. The limit will then be set at €10.000.
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This also applies if the customer wishes to pay with several smaller amounts in cash, but which together amount to a total value of €15.000 (or €10.000) or more. "Even if the merchant has doubts about the customer's identity, they must also record their data," explains Andrea Beyerlein, press spokesperson for the Brandenburg Ministry of Economic Affairs and Energy.
The seller's instinct is often called for. "If a customer provides contradictory information or there is an obvious discrepancy between the business value and the customer's financial circumstances, suspicion is warranted. If the doubts cannot be dispelled, a suspicious transaction report should be filed and the transaction should be avoided," Beyerlein emphasizes. For example, a case made the news in which a "customer" ordered several expensive cars and paid in cash upfront. He later canceled the purchase and wanted the refund transferred to his account. The dealer reacted correctly and reported the case to the police.
For natural persons, the dealer must, for example, record the name, date and place of birth, nationality, address, and all identification details. The business owner is permitted to copy the ID and keep the copy for their records. If the buyer is not a natural person, but, for example, an employee purchasing a vehicle for a GmbH (limited liability company) or KG (limited partnership), all data relating to the company and the natural persons behind it must be documented to prevent "straw man transactions."
The legislator's goal is to determine who actually owns the money. Since an amendment to the Money Laundering Act on June 18, 2016, the seller must identify not only the contractual partner but also any person they may have sent as a representative. Larger companies in particularly sensitive industries may also be required to have a designated money laundering officer. Regulations vary from state to state. You can find out whether you are affected by this by contacting the supervisory authority.
The topic could become even more important in the future and affect more companies, because 4. EU Money Laundering Directive of 2015 to be implemented by 26 June 2017 be implemented into national law. This provides, among other things, that commercial traders in goods Cash payments from 10.000 euros have to identify their customers. "The new anti-money laundering law is impacting processes and procedures in car dealerships," says Ulrich Dilchert, legal expert at the Central Association of the German Automotive Industry. "Employees must cope with numerous new tasks in this context."
To assist in this, the German government plans to create a database, a so-called transparency register, that will disclose the owners ("beneficial owners") of all companies. This register is to be introduced as part of the 4th EU Money Laundering Directive.
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