Suspicion of money laundering

Legal advice on suspicion of money laundering and account freezing

The shock is just as great for businesses as it is for private clients: they want to make a transfer, pay a bill, and the bank is not cooperating. It has frozen the account due to suspicion of money laundering. This can have fatal consequences for both business and private clients as they have no access to their liquid assets. To avoid far-reaching consequences, immediate action should be taken, and an experienced attorney should be consulted to lift the account freeze as soon as possible.

Money laundering is a serious offense and, according to § 261 of the Criminal Code (StGB), can be punished with a fine or imprisonment of up to five years. Therefore, it is crucial to decisively counter the suspicion of money laundering, says attorney Michael Rainer, contact person for economic criminal law at the law firm MTR Legal.

Anti-Money laundering law to combat money laundering and terrorist financing

The Act on Tracing Profits from Serious Crimes – the Money Laundering Act (GwG) – came into effect on June 26, 2017. The purpose of the law is to prevent money laundering and terrorist financing and to combat tax evasion.

To be able to prosecute money laundering effectively, the then federal government passed the law to improve the criminal fight against money laundering. As a result, any crime can be relevant for the prosecution of money laundering, not just serious crimes such as murder, robbery, receiving stolen goods, fraud, bribery, or supporting terrorist organizations. However, this amendment has also led to private individuals and business people being falsely accused of a crime more frequently.

GwG imposes increased due diligence and compliance requirements

At the same time, the GwG increased the due diligence and compliance requirements for certain companies, credit institutions, and financial service providers. For example, banks are required to immediately report suspicious matters to the Central Office for Financial Transaction Investigations. The reporting of a suspicious transaction usually leads to the bank freezing the account. It is at the discretion of the bank under which circumstances it considers a transaction suspicious. This can include, among other things, high cash deposits of 10,000 euros at the home bank, incoming payments from abroad, or receipt of fixed deposits intended for a third party. Similarly, unusually high transfer amounts or many transfers of smaller amounts can lead to a suspicion of money laundering. Problematic for the bank customer is that they do not receive detailed information about the reason for the account freeze, as this would make the bank criminally liable under the GwG.

Account freezing due to suspicion of money laundering

The requirements of the GwG have led to many banks quickly reporting a suspicion of money laundering. If the bank has frozen the account due to suspicion of money laundering, a transaction can only be made with the permission of the Central Office for Financial Transaction Investigations (FIU) or the responsible public prosecutor’s office. However, in practice, many banks no longer execute transactions once the account is frozen. Since an account freeze can have significant consequences and also damage the reputation of a company, the freeze should be lifted as soon as possible. This is often only possible with the support of a competent attorney. In fact, the suspicion is often quickly clarified, and the bank customer can freely access their account again.

Obligated companies must take precautions

Money laundering aims to protect assets obtained through a criminal act. Those who hide or disguise such assets, or thwart or endanger their seizure, are guilty of money laundering according to § 261 StGB. The GwG regulates which precautions credit institutions and financial service providers, lawyers and notaries, auditors and tax consultants, commercial traders of goods, real estate agents, insurance companies, art brokers, or organizers of gambling must take to prevent money laundering. Violations of these duties can result in heavy fines.

As a result, obligated companies must implement effective risk management. This includes a risk analysis and appropriate internal security measures.

MTR Legal attorneys are experienced contacts in economic criminal law and also advise in cases of suspicion of money laundering.