Money laundering law in Germany is being reformed

Following the reform, concealing criminal profits is now definitely a criminal offense. But what will change for players in German online casinos and online game libraries?

The political will is clearly evident: The aim is to make it easier for offenders to be convicted in the event of suspected money laundering. So far there have been major criminal hurdles here, so that the accused could often not be proven money laundering. For this reason, the concealment of criminal profits should be punishable in any case in the future. Criticism comes from the opposition.

Fight organized crime better

Money laundering is a big problem, especially in organized crime. Here one tries regularly to smuggle illegally earned money into the legal economic cycle as unnoticed as possible. After all, the criminals cannot simply spend the money they make from drug, arms or human trafficking without being noticed. Instead, the perpetrators look for different options with which they can return their illegal money to the legal economic cycle.

So far, the legal situation in Germany has been such that a conviction for money laundering required certain “predicate offenses” from which the money had to come. In many cases, however, it was not possible for the investigative authorities to prove these predicate offenses to the perpetrators. The result: many of the suspects could not be convicted.

“Anyone who hides an object that stems from an illegal act mentioned in sentence 2, conceals its origin or thwarted or endangered the determination of the origin, the finding, the confiscation or the seizure of such an object with imprisonment from three months to five Years punished. Unlawful acts within the meaning of sentence 1 are crimes as well as certain offenses (e.g. commercial bribery, extortion, stolen goods, fraud, breach of trust) as well as other offenses (e.g. formation of a criminal association, preparation of a serious act of violence endangering the state as well as sports betting fraud and illegal gambling). “

After the offense has been revised, the predicate offense should no longer play a role in the future. Accordingly, there can always be a criminal money laundering act if criminal profits are to be concealed. That is what the Bundestag decided in these days. The responsible Minister of Justice Christine Lambrecht (SPD) is convinced of the benefits of the reform:

“With the newly formulated money laundering offense, we are fighting organized crime even more intensively and drying up illegal flows of money.”

Opposition is dissatisfied

Criticism of the new legal reform comes from the opposition. She doubts the benefit of the revised law and describes the project as ineffective. In addition, there are fears that the investigative authorities will no longer be able to keep up with the investigation of the likely significantly larger number of suspected offenses.

Friedrich Straetmanns (Die Linke) summed it up with the following statement:

“An enforcement deficit is inevitable.”

Furthermore, many a legal expert has already warned of a “bureaucratic monster”. Since a specific predicate offense is no longer required to carry out money laundering in the future, money laundering also works after a shoplifting, for example. This fact could mean that the investigative authorities would have to spend unnecessarily large amounts of resources to pursue such minor cases.

Is money laundering also an issue in online casinos?

Of course, online gaming providers must already comply with certain anti-money laundering laws. This includes that suspected money laundering is reported immediately to the competent authorities and that appropriate investigations are initiated in this case. In our guide on the topic of “Beginner’s mistakes in online casinos” you will also find information on playing with third-party credit cards or bank accounts and on suspicion of money laundering.

If a casino finds out, for example, that a player regularly deposits large amounts using Paysafecard, only plays with part of the money and then wants to have it paid out to the online bank account, a suspicion of money laundering arises. For this reason, the KYC principle plays an important role in online casinos. At the same time, the operators require that withdrawals must be processed using the same payment method as the previous deposit.

In recent years, the number of money laundering cases recorded by the police in Germany has stagnated at a high level:

• 2015: 9,641
• 2016: 11,541
• 2017: 10,015
• 2018: 8,652
• 2019: 9,764

Prevent suspicion of money laundering: observe reporting obligations

If a player in Germany receives a payment from abroad, he must report this to the Bundesbank under certain conditions. This is at least the case regularly when the transfer amount is 12,500 euros or more. Since almost all online casinos and online game libraries have their headquarters abroad, the reporting obligation must be observed at the latest from a payout amount in this amount.

Normally above this amount (e.g. for casino winnings) there should also be a corresponding note on the account statement of the casino player: “Observe AWV reporting obligation, hotline Bundesbank: 0800 1234 111.”

“AWV” is the abbreviation for “Foreign Trade Ordinance”. The exact regulations on this topic for transfers to and from Germany can be found in § 11 Foreign Trade Act (AWG) in conjunction with §§ 67 ff of the AWV. Not only private individuals are required to report, but also legal entities (e.g. companies). The prerequisite is a place of residence or a company headquarters in Germany. Failure to comply with the reporting obligation is an administrative offense that can be punished with a fine of up to 30,000 euros.

Anyone who receives a transfer credit of over 12,500 euros from abroad (e.g. Malta) (e.g. a casino win) must report the payment to the Bundesbank.

Banks must also report suspected money laundering

If a bank has evidence that a customer transaction may be money laundering, a so-called money laundering suspicion report is carried out. This means that the account holder is reported to the Customs Financial Intelligence Unit. Here it is checked whether the suspicion of money laundering is substantiated or whether a plausible reason for the receipt of the money can be presented. It is not uncommon for your own bank to contact the account holder concerned by telephone beforehand to find out where the money is coming from. Only if no plausible information can be provided is a suspected money laundering report issued in the second step.

In order to avoid criminal charges for money laundering, the following principles should be observed:

1. Transparency helps: Your own bank employee should be informed in good time about expected incoming payments and, if necessary, informed about the origin of the money. If the information seems plausible and fits your own financial situation, there should be no problems.
2. Signaling willingness to cooperate: The account holder should inform the bank employee that he is cooperative and is available to answer questions at any time. This can prevent the bank employee from hastily sending a suspected money laundering report.
3. Threatening with consequences: As a customer, you should also clearly state that if the bank reports premature or unfounded money laundering, you will immediately end the customer relationship completely and switch to another bank.
4. Knowing responsibilities: If your own bank employee points out that the compliance department is responsible for such cases, then this is usually only partially true. As a rule, the personal customer advisor has the last word, as he should know his customers and the financial circumstances best.

Tip: If the bank should report money laundering anyway, it is advisable to seek professional support in any case. Either your own tax advisor or a lawyer specializing in tax law or criminal law can help.

Conclusion

Of course, the online gaming providers do their best to combat money laundering on their platforms as best they can. It is questionable whether this will actually always succeed. The fact is, however, that at least in Germany the banks and authorities are very sensitive to the issue and, if in doubt, they tend to ask too much rather than too little. Anyone who has won a higher amount in the online casino or online game library should find out exactly what their bank is doing in advance and, if necessary, seek advice. In principle, gambling winnings in Germany are at least tax-free. Alternatively, successful players can also use alternative payment methods such as e-wallets (e.g. Skrill, Neteller). The Bundestag has now decided to tighten the Money Laundering Act. In the future, a defined predicate offense will no longer be required in order to fulfill the criminal offense. Instead, any offense can then be the predicate offense to criminal money laundering.