The legislature is taking this matter seriously Anti-money laundering. This has significant implications for businesses. But tax advisers, too, are faced with numerous obligations and requirements. Anyone who isn’t careful could unwittingly find themselves in serious trouble. It is therefore high time that tax advisers and tax firms addressed the issue of Money laundering employ. What does that mean? Anti-Money Laundering Act? How is money laundering defined? How are tax advisers affected, and how can they protect themselves? On „hsp live at 11“, Samuel Königshoven, Customer Success Manager at hsp, spoke to chartered accountant Stefan Dreßler.
Together with two partners, Stefan Dreßler runs a law firm in Traunstein in Upper Bavaria, very close to Lake Chiemsee. He also serves on the executive board and various committees of the LSWB (Bavarian Association of Tax Advisers and Auditors). Samuel would first like to know what the tax implications are when it comes to money laundering. Stefan explains that Money laundering is often carried out in connection with tax evasion. Since 1 January 2020, tax advisers, auditors and solicitors have been obliged to comply with the Money Laundering Act, or GwG for short.
Strictly speaking, the professional groups mentioned are service providers. However, the legislator once again had its own plans and placed those listed in a hybrid position. Now, these professionals must also keep a close eye on what is going on with their clients. This new position brings with it a great deal of uncertainty. The Criminal Code clearly defines what money laundering is: the concealment of unlawfully obtained assets. By definition, money laundering has already taken place in this context. The Anti-Money Laundering Act (GwG), on the other hand, takes a preventive approach: money laundering is to be prevented. So, should professionals in law firms notice anything suspicious, they must report it. Tax advisers, auditors and solicitors cannot refuse to do so. If they fail to fulfil these obligations, this may have consequences – ranging from a fine to disciplinary sanctions under professional regulations.
Prevention of money laundering starts with the enquiry
Are there any indicators that consultants can use to identify money laundering? Stefan replies that, first and foremost, the firm’s practice is examined. Does the firm or the consultant specialise in a sector where the risk of money laundering is higher? Sectors where large amounts of cash change hands are particularly affected, especially when large sums of unknown origin are involved. If, on the other hand, the firm works predominantly with medical practices, money laundering is unlikely to be a major concern. Furthermore, the firm’s own staff should be trustworthy and responsible. It is important to document all processes and procedures in the greatest possible detail.
The enquiry is then examined in detail. In doing so, fundamental questions are addressed: Is the mandate a good fit for the firm? Can the client be given the necessary professional support? Does the client pose a risk to the firm in any way? Is the person who they claim to be – and what is their background? Samuel wants to know what politically exposed persons (PEPs) are all about. Stefan explains that these are individuals who wish to involve third parties in a particular matter. This means that the PEP plays a passive role in the context. When acting for PEPs, the risk for the firm lies in the fact that these individuals may be drawn into unlawful activities more frequently. Law firms have the option of checking PEP lists in advance to assess the risks associated with new clients.
Reducing the risk of money laundering with software support
To carry out a risk analysis, Stefan’s practice uses software provided by the Chamber of Tax Advisers. Checklists can be used to assess the nature of the business relationship. Opti.Tax also offers a similar solution with its money laundering module. This is the obvious choice, particularly for professionals who work within the Opti.Tax ecosystem. Whichever software is used, digital tools make risk analysis much easier and should always be utilised.
A phrase that Samuel hears time and again from tax advisers in the context of anti-money laundering and client identification is: „I know my clients, after all.“ Stefan points out that simply knowing the client is not enough. People can go about their business for years under a false identity. That is why there is no alternative to verifying a person’s identity. Here, the copywriter at hsp would like to interject with a communication tip: if tax advisers feel silly asking someone for their ID after eight years of working together, they should simply blame the law: „The law now stipulates that we have to check our clients“ identity cards once.” If you don’t make a big deal out of an issue, it won’t become a big deal.
There is still a lack of practical experience in the area of money laundering
A piece of advice from Stefan to all firm management teams: Make anti-money laundering a top priority! Only when management takes the issue seriously will staff give it the importance it deserves. The Chambers of Tax Advisers in the individual federal states determine the minimum firm size at which a money laundering officer is required.
If a suspicion of money laundering arises, the advisory firm must submit a report to the FIU (Financial Intelligence Unit, known in Germany as the „Central Office for the Investigation of Financial Transactions“). The client must not be informed of the report. The FIU then decides whether and in what form it will take action. Stefan sees this as a difficult grey area for the advisory profession in some respects. Anything beyond standard financial accounting is, in principle, subject to a duty of confidentiality. When there is a suspicion of money laundering, the question arises: when did this suspicion arise? During the financial accounting process? Or during the advisory meeting? When can and must I submit a report, and when not? On the one hand, there is the risk of penalties for breaching the reporting obligation; on the other, penalties for breaching the duty of confidentiality. Future cases will show which approaches prevail.
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