LVMH limits to cash payments in Germany

The relevant legislation in Germany is the law to prevent money laundering and terrorist financing (Geldwäschegesetz or GwG). This is the German Law implementing the Fifth European Anti-money Laundering Directive (EU Directive 2018/843).

The German Federal Ministry of Finance has drawn up a 16-point action plan. It focuses on the supervisory structures and attempts to create a foundation for the next European Anti-money Laundering Directive, to reorganise the responsibilities of the supervisory authorities and to expand the options of the Financial Intelligence Unit (FIU) for accessing data relevant to money laundering and terrorist financing.

A draft law for the implementation of the Sixth European Anti-Money Laundering Directive (EU Directive 2018/1673) is already available. Since the directive deals with combatting money laundering under criminal law, its implementation will be carried out in the German Criminal Code.

There is no general maximum amount for cash payments in Germany. However, only cash transactions of less than EUR 10,000 for the purchase of goods and cash transactions of less than EUR 2,000 for the purchase of high-value goods (e.g. precious metals or stones, jewelry, watches, art objects, vehicles) can be performed anonymously. In case these threshold values are reached or exceeded in the course of business activities, the dealer has certain obligations under the GwG:

• A risk management system consisting of risk analysis and security measures must be established. This obligation can apply to a single transaction that reaches the above-mentioned thresholds.
• Due diligence obligations regarding customers. In particular, the identity of the contracting party must be verified and, as the case may be, the beneficial owner must be established. The data to be obtained must be recorded, documented and stored.

If the dealer has indications that assets have an illegal origin, the assets are related to the financing of terrorism, or the contracting party has not disclosed whether it is acting on behalf of a beneficial owner, the dealer is obliged to report this immediately to the FIU (see answers to question 6 and 8).

According to Section 14 (1) Sentence 2 German Bundesbank Act, banknotes denominated in Euros are legal tender and must be accepted without restriction. This also applies to EUR 500 banknotes, even though German banks no longer issue them after the Governing Council of the European Central Bank decided on 4 May 2016 that the EUR 500 note would not be issued after the end of 2018. However, a shop assistant may refuse to accept banknotes if he does not have enough change in stock or if the price of the purchased goods is disproportionate to the denomination of the banknote.

The current GwG does not contain provisions on partial or related cash payments. However, the threshold values outlined in the answer to question 3 also apply to split payments in a transaction or to several transactions that are or appear to be related and together reach the relevant threshold.

No, payments exceeding the threshold value outlined above do not generally trigger reporting obligations. However, if there are facts indicating that assets have an illegal origin, the assets are related to money laundering or terrorist financing or the contracting party has not disclosed whether it is acting on behalf of a beneficial owner, the dealer is obliged to report these facts immediately to the FIU pursuant to section 43 GwG. The reporting obligation applies regardless of the value of the transaction and the method of payment (e.g. cash or non-cash).

The competent authorities overseeing the enforcement of the relevant legislation are listed in Section 50 GwG. Depending on the obligated party, the competent supervisory authorities are the German Federal Financial Supervisory Authority, the respective supervisory authority for the insurance industry, the respective local bar association, and the chamber of patent attorneys. For notaries, the respective president of the regional court, the chamber of auditors, the respective local chamber of tax consultants, the authority responsible for granting the gambling law license and, in all other respects, the authority responsible under federal or state law.

The competent authority to report to is the FIU (see Section 27 to 42 GwG). The FIU is located within the German General Customs Directorate at the German Customs Investigations Bureau.

In principle, the client must report to the FIU electronically (Section 45 GwG) via the "goAML" application programme, which the FIU makes available to obligated parties as a reporting portal. You can find the portal here.

The relevant responsibilities of the client in that respect are detailed in section 43 to 49 GwG:

• In principle, a reported transaction may not be carried out before the FIU or the Public Prosecutor's Office has given its approval or if three working days have elapsed after the date of dispatch of the report without the FIU or the Public Prosecutor's Office responding (Section 46 GwG).
• The client must not notify the contracting party, the originator of the transaction and other third parties of an intended or submitted report (Section 47 GwG).
• If a report or criminal complaint in connection with money laundering or terrorist financing proves to be unfounded in terms of content, you cannot be prosecuted for this (Section 48 GwG). This does not apply to proven gross negligence or deliberately false information.

If employees submit a report, this must not result in disadvantages for the existing employment relationship (Section 49 GwG).

Section 56 GwG contains sanctions for violations of the obligations under the GWG. For committing an administrative offence under Section 56 (1) and (2) GwG, fines may be imposed of up to EUR 50,000 for negligent breaches, up to EUR 100,000 for reckless breaches and up to EUR 150,000 for intentional breaches. Depending on the severity of the infringement, the amount of the fine can be as much as EUR 5 million or 10% of the previous year's turnover.

In addition, obligors who fail to comply with their obligations under the GwG (particularly in the event of a breach of the reporting obligation under Section 43 (1) GwG) may be liable for prosecution. The main offences include money laundering (Section 261 German Criminal Code), aiding and abetting money laundering (Section 27 German Criminal Code) and obstruction of justice (Section 258 German Criminal Code).

Furthermore, there is a risk of a loss of image as the supervisory authorities are obligated pursuant to Section 57 GwG to publish final measures and incontestable fine decisions on their websites for a period of five years. The type and extent of the violation and the persons responsible for the violation are named.

Moreover, pursuant to Section 51 (2) GwG, the competent supervisory authorities may, within the scope of the tasks assigned to them by the GwG, take the appropriate and necessary measures to ensure compliance with all requirements laid down in the GwG. These measures can also be enforced in administrative proceedings with substantial penalty payments.

Insofar as personal data are processed within the scope of the due diligence and reporting obligations, they may only be processed for the purposes of preventing money laundering and terrorist financing and not for other purposes (Section 11a GwG).