Anonymous Accounts

Anonymous Accounts

The final draft of the „Anti-Money Laundering Regulation (AMLR)“ specifically addresses the issue of anonymous accounts, including bank and payment accounts, passbooks, safe-deposit boxes, and crypto-asset accounts.

Prohibition of Anonymous Accounts

Credit institutions, financial institutions, and crypto-asset service providers will – in the future proposed by the final draft of the AMLR – be strictly prohibited from maintaining any form of anonymous accounts.

This includes not only traditional bank and payment accounts but also extends to anonymous passbooks, safe-deposit boxes, and specifically, anonymous crypto-asset accounts.

The regulation is comprehensive in its approach, covering any account or service that could facilitate the anonymization of the account holder or obscure the transparency of transactions.

This extends to technologies that enhance anonymity, such as anonymity-enhancing coins which are designed to obfuscate transaction details.

Existing Anonymous Accounts

For existing anonymous accounts or services (like passbooks and safe-deposit boxes) already held by credit or financial institutions, or for existing anonymous crypto-asset accounts, the regulation mandates that customer due diligence measures must be applied before these accounts can be utilized in any capacity.

This ensures that even legacy accounts, which were previously anonymous, are brought into compliance with the regulations by verifying the identity of the account owners and beneficiaries.

Payments with Anonymous Prepaid Cards

The final draft of the AMLR also addresses the use of anonymous prepaid cards, particularly those issued in third countries.

Credit institutions and financial institutions that function as acquirers (as defined in Article 2, point (1) of Regulation (EU) 2015/751) will not be permitted in the future to accept payments made with these anonymous prepaid cards.

This rule can only be circumvented if regulatory technical standards, adopted by the Commission, provide exceptions based on a demonstrably low risk associated with such transactions.

Section 154 of the Fiscal Code of Germany – Authenticity of Accounts

The „Fiscal Code of Germany“ contains specific provisions aimed at ensuring the authenticity of accounts and preventing the use of anonymous bank and payment accounts.

Prohibition of False Identities

  • The use of false or fictitious names for opening accounts, causing entries in accounts, placing valuables in safe custody, pledging valuables, or procuring safe deposit boxes is strictly prohibited.

Verification and Recording of Identity

  • Institutions holding accounts or valuables, or issuing safe deposit boxes, are required to verify and record the identity and address of each person with power of disposal and each beneficial owner as defined in the Money Laundering Act.
  • This information must be recorded in a suitable form, directly in the case of accounts.
  • Institutions must ensure they can provide revenue authorities with information on accounts, safe deposit boxes, and valuables at all times, and must continuously monitor business relations and update data at appropriate intervals.

Additional Data Collection for Credit Institutions

  • Credit institutions must also collect and record each account holder’s, person with power of disposal’s, and beneficial owner’s identification number (as per section 139b) and business identification number (as per section 139c), or tax number for entities not issued a business identification number.
  • Parties involved must provide this data to credit institutions and notify them of any changes during the business relationship.
  • Exceptions are made for credit accounts solely for financing private consumer goods under a certain amount (12,000 euros), where these requirements do not apply.

Procedure for Obtaining Identification Numbers

  • If necessary identification numbers are not provided, credit institutions must request them from the Federal Central Tax Office within three months of establishing the business relationship, using an automated procedure.

Recording and Reporting Non-Compliance

  • If data cannot be ascertained due to lack of cooperation, credit institutions must record this and notify the Federal Central Tax Office, providing collected data for such accounts.

Possible Easing of Requirements

  • Revenue authorities may ease these requirements in individual or certain categories of cases if compliance causes undue hardship and does not adversely impact taxation.

Consequences of Contravention

  • In cases of contravention, credit balances, valuables, and contents of safe deposit boxes can only be returned with the consent of the tax office responsible for assessing the income and corporation tax of the person with power of disposal.

Section 24c of the German KWG – Automated Access to Account Details

The „German Banking Act (Kreditwesengesetz – KWG)“ Section 24c outlines the regulations for automated access to account details by credit institutions, aiming to enhance transparency and prevent the misuse of anonymous bank and payment accounts.

Data File Maintenance

  • Credit institutions are required to maintain a data file with immediate entry of account-related data, including account numbers for accounts with identity verification obligations, the opening and closing dates, and the names and dates of birth (for natural persons) of account holders and authorized parties. For certain cases under the Money Laundering Act, the economic beneficiary’s name and address (if available) must also be stored.
  • Any change in the stored data necessitates the creation of a new data record, with the deletion of data set for three years after account closure or data update.
  • Institutions must ensure BaFin (Federal Financial Supervisory Authority) has automated, unmonitored access to this data.

BaFin’s Data Access

  • BaFin may access the data for prudential functions under the KWG or Money Laundering Act, especially for issues related to unauthorized banking, money laundering, or fraud, provided there’s a specific urgency.

Information Sharing

  • Upon request, BaFin can share this information with various authorities and courts for prudential functions, international judicial assistance in criminal cases, or functions under the Foreign Trade and Payments Act.
  • Data access and transmission by BaFin are automated, with the responsibility for the permissibility of transmission lying with the requesting authority.

Data Retrieval Monitoring

  • BaFin logs each data retrieval for compliance monitoring with data protection rules, including details like time, data used and retrieved, and retriever’s identity. Log data is strictly for this purpose and is kept for 18 months to 2 years.

Credit Institution Responsibilities

  • Credit institutions must implement necessary measures for automated data access at their own expense, adhering to BaFin’s provisions for data confidentiality and protection.

Data Protection and Security

  • Both credit institutions and BaFin are mandated to implement state-of-the-art data protection and security measures, ensuring data confidentiality and integrity, with standards defined by BaFin in consultation with the Federal Office for Information Security.

Exemptions and Inclusions

  • The Federal Ministry of Finance may allow exemptions from automated data transmission obligations and can delegate this authority to BaFin.
  • The Deutsche Bundesbank and the Federal Republic of Germany – Finance Agency are considered credit institutions for the purposes of this section.

Do anonymous accounts still exist?

Anonymous bank accounts

Anonymous bank accounts, or accounts that do not require the disclosure of the account holder’s identity, have become increasingly rare due to global efforts to combat money laundering, terrorist financing, and tax evasion. The Financial Action Task Force (FATF), along with other international regulatory bodies, has set standards that discourage the use of such accounts by promoting transparency and the exchange of financial information between countries.

However, there may still be jurisdictions or specific instances where anonymous accounts can exist, often in regions with less stringent regulations or where enforcement of existing regulations is lax. These might include:

  1. Certain Offshore Financial Centers: Some offshore jurisdictions have historically offered greater financial secrecy, although many have begun to comply with international standards due to increased global scrutiny.
  2. Countries with Weak Regulatory Frameworks: Nations that have not fully implemented or enforced international AML/CFT standards may still have banks that offer accounts with a high degree of anonymity.
  3. Unregulated or Less Regulated Sectors: In some places, non-bank financial institutions, informal banking sectors, or digital payment platforms might operate with less oversight, potentially allowing for greater anonymity.

Anonymous payment accounts

Anonymous payment accounts are similar to anonymous bank accounts in that they allow transactions without revealing the identity of the account holder. While global financial regulations, led by standards set by the Financial Action Task Force (FATF), have made anonymous accounts increasingly rare, there are still some environments where anonymous payment accounts might exist:

  1. Cryptocurrency Platforms: Some cryptocurrency exchanges and wallets have historically allowed users to conduct transactions with a degree of anonymity, especially those not strictly adhering to Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. However, the trend is changing, with more platforms implementing KYC procedures to comply with regulatory standards.
  2. Prepaid Cards: In some jurisdictions, prepaid cards can be purchased and used anonymously for transactions up to a certain limit. These cards can often be bought with cash and used without the need for registration or identification, although many countries are imposing stricter limits on their use to prevent money laundering and fraud.
  3. Digital and Mobile Payment Services: Some digital and mobile payment platforms may offer services that allow for anonymous transactions, particularly in jurisdictions with less stringent regulatory oversight. These platforms might not require full identity verification, especially for small transactions or in regions prioritizing financial inclusion over strict regulatory compliance.
  4. Informal Financial Systems: Systems like Hawala, an informal method of transferring money without any physical money movement, can sometimes function as anonymous payment accounts, relying on trust and the use of a network of money brokers.
  5. Offshore Financial Centers: Certain offshore jurisdictions may still offer financial products that provide a level of anonymity, although this is becoming less common as global regulations tighten.

Anonymous passbooks

Anonymous passbooks, which are physical booklets used to record bank transactions like deposits and withdrawals without necessarily linking the transactions to the identity of the holder, have become quite rare due to global financial regulations aimed at increasing transparency and combating illicit activities such as money laundering and tax evasion. The shift towards digital banking has further diminished their prevalence. However, there might still be regions or specific circumstances where anonymous passbooks can be found:

  1. Countries with Less Stringent Regulations: Some countries with less rigorous financial regulatory frameworks might still allow the issuance and use of anonymous passbooks, especially in areas with limited digital banking infrastructure.
  2. Informal Banking Sectors: In some parts of the world, especially in less developed or rural areas, informal banking or microfinance institutions might use passbooks for transaction recording. While not necessarily anonymous in the strictest sense, these might not adhere to stringent KYC (Know Your Customer) principles found in more regulated environments.
  3. Legacy Banking Systems: In certain jurisdictions, older banking systems that have not fully transitioned to digital records may still use passbooks. In some cases, these might be legacy accounts that were opened anonymously or with minimal identification requirements.

Anonymous safe-deposit boxes

Anonymous safe-deposit boxes, where the identity of the renter is not known to the bank or institution offering the service, have become increasingly uncommon due to global efforts to enhance financial transparency and combat illicit activities like money laundering, tax evasion, and financing of terrorism. Despite this trend, there might still be regions or specific instances where anonymous safe-deposit boxes can be found:

  1. Jurisdictions with Lax Regulations: Some countries or regions with less stringent financial regulations might still allow for the existence of anonymous safe-deposit boxes. These areas may not fully comply with international standards set by organizations like the Financial Action Task Force (FATF).
  2. Private Security Firms: In certain cases, private security firms that are not subject to the same regulatory standards as banks may offer safe-deposit box services with varying degrees of anonymity. The regulatory oversight of such firms can differ significantly from one jurisdiction to another.
  3. Offshore Financial Centers: Certain offshore jurisdictions, known for their banking secrecy and financial services, might still offer safe-deposit boxes with more privacy, although outright anonymity is becoming rarer due to international pressure and agreements on information sharing.
  4. Legacy and Grandfathered Arrangements: In some places, existing safe-deposit boxes that were rented out under old regulations may continue to be held under those terms, providing a level of anonymity to their holders. However, new rentals would likely adhere to current KYC (Know Your Customer) and AML (Anti-Money Laundering) regulations.

Anonymous crypto-asset accounts

Anonymous crypto-asset accounts, which allow users to engage in cryptocurrency transactions without revealing their identity, can still be found in various forms, despite increasing regulatory efforts to impose Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements on the cryptocurrency sector. The existence and availability of such accounts are influenced by the following factors:

  1. Unregulated or Lightly Regulated Exchanges: Some cryptocurrency exchanges, especially those operating in jurisdictions with less stringent regulations, may not enforce strict KYC procedures, allowing for a degree of anonymity. However, the number of these exchanges is decreasing as international regulatory pressure increases.
  2. Decentralized Exchanges (DEXs): Decentralized platforms, which facilitate peer-to-peer trading without a central authority, can offer more privacy to users. Since DEXs don’t hold users‘ funds and often don’t require user registration or identification, they can be used anonymously to a certain extent. However, this landscape is changing, with discussions on how to implement KYC and AML measures in decentralized systems.
  3. Privacy Coins: Certain cryptocurrencies, known as privacy coins (e.g., Monero, Zcash), are designed to enhance transaction privacy and anonymity. Users holding or transacting in these cryptocurrencies through compatible wallets or platforms can maintain a higher degree of anonymity compared to those using more transparent cryptocurrencies like Bitcoin.
  4. Non-Custodial Wallets: Non-custodial wallets, where users control their private keys directly, can offer more privacy since they don’t necessarily require user identification. Transactions conducted directly between non-custodial wallets, without going through a regulated exchange, can remain relatively anonymous.
  5. Mixing and Tumbling Services: These services obscure the trail of cryptocurrency transactions by mixing the digital assets of multiple users before redistributing them, making it harder to trace transactions back to the original source. However, the use of such services is controversial and often associated with illicit activities.

Other anonymous accounts

Other anonymous accounts can refer to various types of financial or value-storing instruments that allow users to maintain anonymity. These might exist in specific forms or jurisdictions, often exploiting regulatory gaps, technological features, or the lack of international consensus on certain financial practices. Here are some areas where such accounts or instruments might still be found:

  1. Virtual Currencies and Digital Wallets: Outside of mainstream cryptocurrencies, there are various digital currencies and e-wallet platforms, especially in the gaming and online communities, that might allow for anonymous transactions. These platforms may not fall under traditional financial regulations, especially if they are used in closed ecosystems.
  2. Prepaid Cards and Mobile Money: Prepaid debit cards that can be purchased with cash and used without registration offer a degree of anonymity. Similarly, some mobile money services in regions with less stringent regulations might allow users to transact without full identity verification, especially for small amounts.
  3. Gift Cards and Vouchers: Gift cards and vouchers that can be bought with cash and used for online purchases can serve as anonymous payment instruments. While they are not accounts per se, they can be used similarly to prepaid cards for anonymous transactions.
  4. Online Payment Services: Some online payment platforms might offer features that allow for anonymous transactions, particularly those that do not require full identity verification for setting up an account or making small transactions.
  5. Peer-to-Peer (P2P) Platforms and Informal Networks: Platforms that facilitate P2P transactions, lending, and crowdfunding might allow participants to remain relatively anonymous, especially if they are not strictly regulated. Informal value transfer systems, like Hawala, also enable anonymous transfers across borders without moving actual money through conventional banking channels.
  6. Offshore Financial Services: While not as prevalent as they once were due to global crackdowns on tax evasion and money laundering, some offshore financial centers might still offer services that provide a level of anonymity, including trusts, shell companies, and certain banking products.

Which countries are under increased monitoring and considered high-risk?

FATF – High-Risk Jurisdictions and Jurisdictions under Increased Monitoring

3Burkina Faso
6Democratic People's Republic of Korea (DPRK)
7Democratic Republic of Congo
18South Africa
19South Sudan
24United Arab Emirates

EU – List of High-Risk Third Countries (HRTC)

NoHigh-Risk Third Country
3Burkina Faso
5Cayman Islands
6Democratic Republic of the Congo
18South Africa
19South Sudan
22Trinidad and Tobago
24United Arab Emirates