Money laundering is the smuggling of illegally acquired assets into the legal financial and economic circuit while concealing or disguising their true origin. This is understood to mean the introduction of assets (e.g. money) derived from illegal transactions, such as drug trafficking, organised crime, fraud, arms trafficking, protection rackets or tax evasion.

Combating money laundering and terrorist financing is a legal requirement with the aim of curbing organised crime and integrating illegal assets into the legal economic cycle. The basics are found in Section 261 of the German Criminal Code in conjunction with the Act on the Tracing of Profits from Serious Crimes (Anti-Money Laundering Act or AMLA).

The German Anti-Money Laundering Act obliges FinHand as trustee to determine the identity of their customers before they enter into a business relationship with the trustee. This applies to both private customers and natural persons acting as representatives of companies. Trustees are obligated parties under the German Anti-Money Laundering Act (pursuant to Section 2 para. 1 No. 13). They must therefore fulfil, among other things, the general duties of due diligence under Section 10 (1) German Anti-Money Laundering Act, such as the identification of the contracting party (No. 1) and the identification of the beneficial owner (No. 2). The trustors are therefore obliged to provide the information and documents required for the identification and determination of a contracting partner or beneficial owner (Section 11 para. 6 German Anti-Money Laundering Act).

FinHand must continuously monitor the business relationship, including the transactions carried out in the course of the business relationship. To this end, any anomalies or deviations from normal business behaviour that occur during an ongoing business relationship must be identified. FinHand records the usual business behaviour by recourse to and comparison with the previous customer behaviour. In doing so, the usual business behaviour, which is derived from the user profile and previous experience with the respective contractual partner (typologised behaviour), is compared with the current business behaviour. Suspicions of money laundering can arise from various circumstances.

According to Section 3 para. 1 German Anti-Money Laundering Act, the beneficial owner is the natural person who ultimately owns or controls a legal entity or other company, or the natural person at whose instigation a transaction is ultimately carried out or a business relationship is ultimately established.

Beneficial owners in the case of legal entities are all natural persons who directly or indirectly (in the case of a multi-level shareholding structure) hold more than 25% of the capital or voting shares or exercise control in a comparable manner (Section 3 para. 2 German Anti-Money Laundering Act).

If no natural person directly or indirectly holds more than 25% of the capital or voting shares or can otherwise significantly influence or prevent decisions at the company, the legal representatives, managing partners or partners of the company are to be named as (fictitious) beneficial owners.

Pursuant to Section 18 German Anti-Money Laundering Act, the German transparency register is a register for recording and making accessible information on the beneficial owner. The data in the register is a chronological collection of data.

A transparency register extract is not required for a civil law partnership. Foreign companies or trustees only have to submit an extract from the transparency register pursuant to Sections 20 para. 1 sentence 2, 21 para. 1 sentence 2 German Anti-Money Laundering Act if they acquire a property in Germany or enter into a business relationship for the trust with a contracting party domiciled in Germany.

Pursuant to Section 12 para. 3 sentence 3 German Anti-Money Laundering Act, FinHand is not required to take any compliance measures beyond the inspection of the transparency register if the information collected hereunder corresponds to the information on the beneficial owners in the transparency register and there are no other indications that give rise to doubts as to the identity of the beneficial owners, their status as beneficial owners or the accuracy of other information.

If discrepancies were found during the verification of the data of the beneficial owner of a legal entity, a partnership subject to registration or a legal arrangement, a discrepancy report must be made to the transparency register.

Suspected money laundering reports must be submitted to the Financial Intelligence Unit (FIU) in electronic form. For this purpose, the FIU provides the obligated parties (i.e. FinHand) with the web application "goAML" as a reporting portal.

A person who trades for its own account bears the risk of loss and the costs of its trading, but also receives the resulting profits. On the other hand, someone (such as a trustee) who only acts for the account of a third party does not bear any sales risk of its own, but is also only entitled to an agreed remuneration (commission).

For example, a person whose main activity consists of trading in high-value goods is active in a "high-risk sector" (cf. Section 7 para. 3 sentence 2 German Anti-Money Laundering Act). According to Section 1 para. 10 German Anti-Money Laundering Act, high-value goods are items which, due to their nature, their market value or their intended use, stand out from everyday commodities or which, due to their price, do not represent an everyday purchase. These include in particular precious metals such as gold, silver and platinum, precious stones, jewellery and watches, works of art and antiques, motor vehicles, ships and motorboats as well as aircraft.

Non-cooperating states are states that have strategic deficits in anti-money laundering and fraud prevention due to their regulatory framework. For "non-cooperating states", see the FATF's list of states at www.fatf-gafi.org/countries/#high-risk.

Politically exposed persons are those natural persons who hold or have held high-ranking important public offices at international, European or national level (or below national level if of comparable political significance). This includes in particular (i) heads of state, heads of government, ministers, members of the European Commission, deputy ministers and state secretaries, (ii) members of parliament and members of comparable legislative bodies, (iii) members of the governing bodies of political parties, (iv) members of supreme courts, constitutional courts or other high courts against whose decisions there is normally no right of appeal, (v) members of the governing bodies of courts of auditors, (vi) members of the governing bodies of central banks, (vii) ambassadors, chargés d'affaires and defence attachés, (viii) members of the administrative, managerial and supervisory bodies of state-owned enterprises, (ix) directors, deputy directors, members of the governing body or other heads with a comparable function in an intergovernmental international or European organisation.

A relevant family member is a close relative of a politically exposed person, in particular (i) the spouse or registered partner; (ii) a child and its spouse or registered partner; and (iii) any parent.

A known related person is a natural person in respect of whom the person obliged under anti-money laundering law must have reason to believe that this person (i) together with a politically exposed person is the beneficial owner of an association (legal persons under private law and registered partnerships) or legal structure (trusts, certain foundations with no legal capacity, etc.) that is more closely defined under money laundering law.), (ii) maintains other close business relations with a politically exposed person or (iii) is the sole beneficial owner of an association (legal entities under private law and registered partnerships) or legal arrangement (certain foundations with no legal capacity, etc.) that is more closely defined under anti-money laundering law and for which the obliged party must have reason to believe that the establishment was in fact for the benefit of a politically exposed person.

Politically exposed persons are subject to stricter requirements than other persons with regard to combating money laundering and terrorist financing. If a trustor who is a politically exposed person or a person close to such a person wishes to entrust FinHand as trustee, FinHand carries out a check as part of the onboarding process. FinHand then informs the trustor concerned of the result of this examination.

A multi-level shareholding structure exists if other companies have a shareholding in the company.

In the case of multiple shareholding structures, the shareholding relationships of the (direct or senior) shareholders must also be disclosed. This obligation continues until only natural persons remain at the end of the participation chain. In the case of a multiple shareholding structure, a graphical presentation is recommended, i.e. if other companies are involved in the company to be checked by FinHand under anti-money laundering law (= multi-level shareholding structures).

As a rule, the shareholdings in a company to be audited under anti-money laundering law can be accurately ascertained from company documents (in particular articles of association or list of shareholders). Due to Section 11 paragraph 5 sentence 3 subsection 2 of the German Anti-Money Laundering Act, extracts from the commercial and transparency registers alone are not sufficient. In the case of multi-level shareholdings, further documents for the (direct or senior) shareholders are also required.

Yes - The amti-money laundering policy is used to define the internal measures to comply with the legal regulations for the prevention of money laundering and terrorist financing or to implement the requirements of the applicable legal regulations as well as the regulatory pronouncements and the in-house risk-based approach and the specifications of internal safeguards.

The concept of a straw man transaction is often used as a counterpart to fiduciary relationships from the point of view of abuse of rights. Most of the time, such attempts at demarcation unspokenly conceal an effort to classify the abusive use of fiduciary relationships as a straw man transaction in order to reject certain legal consequences that otherwise apply to fiduciary relationships for such straw man transactions.

Whether the parties involved intend to circumvent a legal requirement or to deceive third parties with the straw man transaction does not justify a separate legal category for the straw man transaction. Obviousness is not suitable for distinguishing straw man transactions from fiduciary transactions. On the one hand, case law does not generally consider straw man transactions to be immoral or abusive. On the other hand, the parties often pursue the intention of anonymity or confidentiality even in fiduciary relationships. The legal consequences of circumvention or concealment in individual cases is a complex question; the answers to it are difficult to generalise.