Liability risks for executives and representatives in cases of reckless Money Laundering by employees
The German criminal law establishes clear regulations for anti-money laundering, with a special focus on the liability of executives and representatives of companies that are obligated entities. A key aspect of these regulations concerns reckless money laundering by employees and the resulting liability risks for the executives and representatives of these companies.
Reckless Money Laundering
The German criminal law penalizes the reckless failure to recognize the origin of assets from unlawful acts. Recklessness implies a high degree of negligence where obvious signs of unlawful origin are ignored. This risk becomes particularly relevant when employees of obliged entities are involved in money laundering activities.
Liability Risks for Executives and Representatives
Executives and representatives of an obliged entity bear the responsibility for complying with money laundering regulations. If employees commit reckless money laundering, this can under certain circumstances be attributed to the obliged entity’s executives and representatives, especially if it is proven that they have neglected their monitoring and control duties.
Extended Sanctions and Confiscation
The responsibility of executives and representatives is further deepened by the German criminal law. The German criminal law allows the confiscation of proceeds of crime and extend liability to cases where assets are obtained through reckless money laundering activities by employees.
Conclusion
For obliged entities, this means that they must establish effective compliance structures to minimize the risks of careless money laundering by employees. The executives and representatives of these companies must be aware of the increased liability risks and implement appropriate monitoring and control mechanisms to protect themselves from criminal consequences.
Sources:
https://www.bafin.de/SharedDocs/Downloads/EN/Aufsichtsrecht/dl_gwg_en.html
https://www.bafin.de/SharedDocs/Downloads/EN/Auslegungsentscheidung/dl_ae_auas_gw2021_en.html