In November 2024, BaFin issued an updated version of its Interpretation and Application Notes on the Money Laundering Act, which have been in force since 01.02.2025. They replace the previous version of October 2021 and apply to all obliged entities under the supervision of BaFin. With the update, BaFin has made several cosmetic adjustments, but also some content adjustments.
The biggest change concerns the shortened update periods for existing business relationships. In principle, these will only apply from the entry into force of the EU Money Laundering Directive on 10 July 2027, but should ideally be implemented before that according to the new interpretation and application instructions. The new deadlines, which will apply from 10 July 2027 at the latest, are 1 year for the enhanced due diligence obligations (currently 2 years), 5 years for the general due diligence obligations (currently 10 years) and a risk-appropriate period for the simplified due diligence obligations (currently 15 years). All obliged entities should observe the new deadlines before they come into force and revise their existing processes so that the new requirements can be complied with at the latest by the time of mandatory implementation.
With the update, BaFin is also tightening the requirements for risk analysis and risk management. The authority attaches great importance to a detailed and company-specific risk analysis that takes into account the individual risks of the company, the customer structure, the products and the businesses. All obliged entities must ensure that their risk analysis is regularly reviewed and adapted to the current threat situation.
BaFin has also made changes to the onboarding of new business relationships. When identifying new business partners, the documents submitted must not be older than three months to ensure that the documents to be checked are up-to-date. An excerpt from the transparency register is now mandatory for proof of beneficial ownership – a simple proof of registration is no longer sufficient.
There have also been changes in suspicious transaction reports: After submitting a suspicious transaction report, the previous standard period of three working days no longer applies if there are clear indications of money laundering or terrorist financing. In these cases, the transaction must be temporarily put on hold. In the case of business relationships for which a suspicious transaction report has been filed, the increased due diligence obligations must be applied – at least at the beginning.
In addition, BaFin continues to place a stronger focus on the prevention of terrorist financing and points out once again that the risks must be considered separately from those of money laundering prevention. To prevent terrorist financing, it is advisable to place a special focus on monitoring payment flows. Unlike money laundering, terrorist financing can also involve the use of legal means for illegal activities.
With the new version of the Interpretation and Application Guidelines, BaFin is concretising one of the most useful instruments in the day-to-day business of obliged entities. Obligated entities that are under the supervision of BaFin should pay particular attention to ensuring that the shortened deadlines are implemented in their processes in advance.
