New reporting requirements to combat money laundering in real estate transactions

Position of the Bundesnotarkammer on the entry into force of the Regulation on matters in the real estate sector that are reportable under the Money Laundering Act of 1 October 2020:

“We expressly welcome the Regulation, as it will lead to a significantly higher volume of reports of suspected money laundering cases in the real estate sector by notaries. The Bundesnotarkammer had been campaigning for this for a long time”, explained the President of the Bundesnotarkammer, Prof. Dr. Jens Bormann, in Berlin.

The Regulation defines a catalogue of cases that are particularly relevant in terms of money laundering, in which notaries must submit a report to the Financial Intelligence Unit (FIU) irrespective of their own concrete suspicions. This applies, for example, in the case of contracting parties from risk States or in the case of suspicious payment terms. Bormann said: “The Regulation will lead to a significant increase in the number of reports by notaries and will therefore also have a greater deterrent effect.” The previous legal situation only allowed very limited reporting by the professions providing legal advice such as notaries. In the case of a mere suspicion of money laundering, they were prohibited from making a report due to their strict duty of confidentiality. Otherwise, they would even have made themselves liable to prosecution.

Furthermore, important amendments to the Money Laundering Act, which are also relevant to notarial practice, came into force on 1 January 2020. In real estate transactions, participating companies must provide conclusive documentation of their ownership and control structure. Otherwise, authentication must be refused. Authentication is also prohibited if a foreign company wishes to acquire real estate located in Germany and is not registered in the transparency register. Companies that are not transparent are thus from the outset excluded from the authentication procedure and prevented from acquiring real estate.

“The hurdles for money laundering in the German real estate market have been high before”, Bormann notes. “With the new regulations, notaries can make a further contribution to the fight against money laundering.”

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