Companies in the financial sector run the risk of being abused for money laundering and terrorist financing, particularly in the face of current conflicts and geopolitical tensions. This makes effective prevention all the more important. The sector has already made much progress here. But BaFin inspections show a need for further improvement.

Effective money laundering prevention requires substantial resources. The demands are high. The anti-money laundering (AML) officers play a key role in this regard. They must recognise suspicious payment flows and business models at an early stage in order to prevent money laundering and terrorist financing. A challenging task that requires the support of their management bodies – as well as sufficient staffing and financial resources. In practice, this is not always ensured.

Common goal

It is the common goal of financial supervision and companies to combat money laundering and terrorist financing. Both sides must work in tandem to ensure effective prevention. BaFin’s role is to examine by way of inspections whether the companies are complying with and effectively implementing the regulatory requirements. It has been doing this on an increasing scale for a number of years – in 2022, for example, it conducted 48 own AML inspections and 66 in 2023, with the number increasing once again in 2024.

Prevention measures in places are not always sufficient

In the course of these on-site inspections, BaFin found, amongst other things, that the control measures in place often failed to cover all relevant business areas and were not regularly reviewed. The risk analyses were also often incomplete, making it difficult to comprehensibly identify and assess the risks. Companies must describe in detail their customer and product structures and provide a complete overview of their organisation and distribution structures as well as their transactions.

Credit institutions and other financial institutions must individually adjust their monitoring systems to enable them to identify suspicious transactions. In the course of its inspections, BaFin found that many companies failed to sufficiently adjust their systems to specific risks and regularly review their parameterisation.

BaFin also frequently determined shortcomings in the documentation and retention of identity documents. Financial companies are obliged to record and retain data as part of their due diligence obligations Link.