- Protection of Reporting Employees
- 4th AMLD
- 5th AMLD
- German Bundestag Printed Matter 18/11555
- German Bundestag Printed Matter 19/13827
- German GwG
Protection of Reporting Employees
In the realm of Compliance and AML/CTF efforts, the protection of reporting employees, often referred to as whistleblowers, is paramount. This article delves into the critical aspects of employee protection under the European Union’s 4th and 5th AMLD, as well as the protective measures enshrined in German legislation, particularly through the German GwG.
Foundation for the protection of whistleblowers
The 4th AMLD laid the foundation for the protection of whistleblowers in the financial sector, mandating that Member States ensure individuals, including employees who report suspicions of money laundering or terrorist financing, are shielded from threats, retaliatory actions, and adverse employment consequences. This directive underscored the importance of creating a secure reporting environment within obliged entities, encouraging transparency and the reporting of illicit activities.
Enhancements of protection
Building on the 4th AMLD, the 5th AML Directive introduced more robust protections for reporting employees, emphasizing legal protection from discriminatory employment actions and ensuring a right to file a complaint with competent authorities. This directive expanded the scope of protection and provided a clear, secure pathway for individuals facing retaliation to seek redress, thereby fostering a culture of compliance and ethical reporting.
The German federal government’s draft bills, detailed in the German Bundestag Printed Matters 18/11555 and 19/13827, aimed to transpose the EU directives into national law. These drafts emphasized the non-discrimination of employees who report suspicious activities and established a formal complaint mechanism with the competent supervisory authority, ensuring that reporting employees have access to legal remedies and a confidential platform to voice their grievances.
The German Money Laundering Act (GwG)
The GwG specifically addresses the protection of reporting employees in Sections 49 (4) and (5), reinforcing the ban on discrimination against whistleblowers within their employment relationships. It entitles employees who face retaliation to lodge complaints with the supervisory authority, assuring them of a confidential process and the preservation of their right to legal recourse. This legislative framework is a testament to Germany’s commitment to safeguarding the rights of individuals contributing to the fight against money laundering and terrorist financing.
The specified section of the 4th Anti-Money Laundering Directive (AMLD), Directive (EU) 2015/849, specifically Article 38, addresses the protection of individuals who report suspicions of money laundering or terrorist financing. Here’s a summary focusing on the „protection of reporting employees“:
Scope of Protection
Article 38 mandates that Member States must ensure protection for individuals who come forward with information regarding suspicions of money laundering or terrorist financing. This includes employees and representatives of entities that are obligated to comply with AML regulations (obliged entities).
Types of Reporting
The protection covers individuals whether they report their suspicions internally within their organization or directly to the Financial Intelligence Unit (FIU), which is the national body responsible for processing information related to potential financial crimes.
Nature of Protection
The directive emphasizes the need to safeguard reporting individuals from any form of retaliation as a consequence of their reporting. This includes, but is not limited to, protection against threats, hostile actions, adverse employment actions, or any discriminatory treatment that might arise due to their decision to report.
The main objective behind this provision is to encourage the reporting of suspicious activities by eliminating fear of retaliation among employees and representatives of obliged entities. By ensuring a safe environment for whistleblowers, the directive aims to enhance the detection and prevention of money laundering and terrorist financing activities.
The 5th AMLD (Directive (EU) 2018/843) introduces amendments to Article 38 of the previous directive, enhancing the protection framework for reporting employees. Here’s a summary focusing on the „protection of reporting employees“ based on the provided text:
Extended Legal Protection
The revised Article 38 reinforces that Member States must provide legal protection to individuals, including employees and representatives of obliged entities, who report suspicions of money laundering or terrorist financing. This protection extends to reports made both internally within their organization and externally to the Financial Intelligence Unit (FIU).
Comprehensive Protection Against Retaliation
The amendment specifies that individuals must be protected from threats, retaliatory or hostile actions, and specifically from adverse or discriminatory employment actions. This broad definition of protection ensures that reporting individuals are safeguarded against various forms of retaliation that could arise from their reporting activities.
Right to Lodge Complaints
The directive now explicitly states that individuals facing retaliation for their reporting actions have the right to lodge complaints in a safe manner with competent authorities. This provision ensures that there is a clear and secure process for whistleblowers to seek redress if they experience negative consequences as a result of their reporting.
Importantly, the 5th AMLD mandates that Member States must ensure individuals have access to effective remedies to protect their rights if they face retaliation. This means that beyond just lodging complaints, individuals should have access to mechanisms that can actively restore their rights and address any injustices experienced due to their reporting actions.
The amendment also addresses confidentiality concerns, stipulating that the right to an effective remedy should be provided without prejudicing the confidentiality of the information gathered by the FIU. This ensures that the integrity of the investigation and the protection of sensitive information are maintained, even as individuals seek redress for retaliation.
German Bundestag Printed Matter 18/11555
The „German Bundestag Printed Matter 18/11555“ outlines a Draft Bill for the implementation of the Fourth EU Anti-Money Laundering Directive among other related regulations. The focus here is on the „protection of reporting employees“ as detailed in the special part of the draft concerning the Law on Tracing Profits from Serious Criminal Offenses, particularly in Section 49 regarding Access to Information and Protection of Reporting Employees. Here’s a summary focusing on the protection of reporting employees:
Context and Purpose
The draft bill aims to replace the existing Money Laundering Act with a revised version in accordance with the Fourth Money Laundering Directive. It also includes the reorganization of the Central Office for Financial Transaction Investigations.
Implementation of EU Directive
Section 49 of the draft bill is designed to implement Article 38 of the Fourth Money Laundering Directive, aligning with recital 41 of the same directive. This section is specifically focused on ensuring the protection of employees who report suspicions of money laundering or related issues.
The critical component of this provision is in paragraph 4 of Section 49, which is dedicated to protecting reporting employees. It emphasizes that individuals in an employment relationship with an obliged entity (such as financial institutions or other entities covered under anti-money laundering laws) are safeguarded when they report suspicious activities either pursuant to Section 43 or through internal reporting channels.
Prohibitions Against Retaliation
The draft bill specifies that employees who make such reports must not face any form of disadvantage within their company. This includes protection against unjustified dismissal, professional demotion, or any form of hostilities within the workplace as a result of their reporting activities.
Scope of Protection
The protection is aimed at ensuring that the workplace environment remains conducive to reporting potential money laundering activities without fear of retaliation, thereby fostering a culture of compliance and ethical conduct within organizations.
German Bundestag Printed Matter 19/13827
The „German Bundestag Printed Matter 19/13827“ discusses amendments to the Law on Tracing Profits from Serious Criminal Offenses, particularly focusing on enhancing the protection of reporting employees under Section 49, specifically with the addition of Paragraph 5 concerning the Right to Complain. Here’s a summary focusing on the protection of reporting employees:
Introduction of the Right to Complain
Paragraph 5 of Section 49 introduces a formal right for employees to file a complaint with the competent supervisory authority under Section 50 if they face discrimination in their employment relationship as a result of reporting suspicions of money laundering or terrorist financing. This is in line with the directive’s amendment, which aims to provide a secure avenue for individuals to seek redress if they are subjected to adverse actions following their reports.
Implementation of the Amending Directive
This provision implements the requirements of the Amending Directive to the 4th AMLD, ensuring that individuals who report internally or to the central reporting office and face retaliation have a clear and secure mechanism to file a complaint with the supervisory authority.
Preservation of Legal Recourse
The draft bill clarifies that the introduction of the complaint procedure does not affect an individual’s right to seek legal recourse. Specifically, employees who believe they have been discriminated against can still approach labor courts, irrespective of whether they have gone through the complaint procedure. This ensures that employees have multiple avenues to seek justice and protection against discrimination.
Confidentiality in the Complaint Process
To facilitate the secure submission of complaints, the draft bill specifies that complainants can use the supervisory authority’s confidential information system, as outlined in Section 53 Paragraph 1 Sentence 2. This ensures that the process respects the confidentiality of the individual’s information and the sensitive nature of their complaint.
The German Money Laundering Act (GwG) includes specific provisions aimed at protecting employees who report suspicions of money laundering or terrorist financing, as outlined in Section 49 (4) and (5). Here’s a focused summary on the „protection of reporting employees“:
This subsection ensures that employees of obliged entities (such as financial institutions, certain professionals, and other entities bound by the GwG) who report suspicions of money laundering or terrorist financing, either externally in accordance with Section 43 (1) or internally within their organization, are protected from discrimination in their employment relationship. This means that the act of reporting should not lead to negative consequences for the employee within their workplace, such as demotion, termination, or any form of hostile treatment.
Right to File a Complaint
If an employee does face discrimination or retaliation contrary to the protections outlined in subsection (4), they are entitled to file a complaint with the competent supervisory authority as specified under Section 50 of the GwG. This provision ensures that employees have a formal channel through which they can seek redress if they are subjected to discriminatory treatment as a result of their reporting activities.
Legal Recourse and Confidentiality
The legislation clarifies that the option to file a complaint with the supervisory authority does not preclude the employee from seeking legal recourse through the courts. This ensures that employees have multiple avenues to address grievances related to discriminatory treatment. Furthermore, when filing a complaint with the supervisory authority, the employee can utilize the authority’s confidential information system (as outlined in Section 53 (1) sentence 2) to maintain the confidentiality and integrity of their complaint.
- Directive (EU) 2015/849 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32015L0849
- Directive (EU) 2018/843 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32018L0843
- German Bundestag Printed Matter 18/11555 https://dip.bundestag.de/vorgang/gesetz-zur-umsetzung-der-vierten-eu-geldwäscherichtlinie-zur-ausführung-der-eu-geldtransferverordnung/80085
- German Bundestag Printed Matter 19/13827 https://dip.bundestag.de/vorgang/gesetz-zur-umsetzung-der-änderungsrichtlinie-zur-vierten-eu-geldwäscherichtlinie/251728
- German Anti-Money Laundering Act (Geldwäschegesetz – GwG) https://www.bafin.de/SharedDocs/Downloads/EN/Aufsichtsrecht/dl_gwg_en.html