Prevention of Money Laundering
KfW, as a public-law institution based in Germany, is a promotional bank that supports the economy, society and ecology in Germany, Europe and worldwide. KfW is owned by the federal government (80%) and the federal states (20%). KfW does not affect competition among banks. The official promotional mission is anchored in the KfW Law. KfW's tasks are the promotion of small and medium enterprises, of housing finance and modernisation, and of education and advanced training, the financing of municipal infrastructure projects, the promotion of export and project finance and of the developing and transition countries and the protection of the environment and the climate. KfW raises the majority of the promotional funds on the capital market.
KfW is firmly committed to participating in international efforts to combat money laundering and the funding of terrorist and criminal activities.
The Federal Republic of Germany is a member country of the Financial Action Task Force (FATF) and the European Union (EU) and has enacted laws and rules designed to implement the anti-money laundering policies of both FATF and the EU. In 1992, section 261 of the German Penal Code, which makes money laundering a criminal offence, took effect in Germany. The Money Laundering Act (Geldwäschegesetz), which entered into force in 1993, establishes statutory duties for credit institutions and other businesses. In 2008, the Money Laundering Act and the German Banking Act were amended by several regulations which also serve as prevention against terrorist financing. The most important requirements, which serve as minimum standards for KfW, are the following:
- Assignment of an Anti-Money-Laundering Officer
- Ascertainment of customer identity
- Establishment of the ultimate beneficiary
- Ascertainment of politically exposed persons
- Record keeping
- Reporting of suspicious circumstances / transactions to the authorities
- Regular Training of the employees on Anti-Money Laundering.
KfW observes the national legislation against money laundering and is supervised by the Federal Ministry of Finance.
KfW has made the organisational and procedural arrangements that are necessary for it to comply with the respective legal requirements. This includes written policies and procedures, the assignment of an Anti-Money-Laundering Officer, regular review of the reliability of the employees and regular training for the competent staff. According to the relevant EU-directives and to prevent business operations from being used for terrorist financing KfW established a regular computer-based comparison of all business partners with the actual EU sanction lists.
Essential part of the Anti-Money-Laundering Policy of KfW is the identification of its customers by official documents and other relevant information. Whenever KfW is required to identify a customer, the ultimate beneficiary (of the account / the cash transaction) and a potential participation of politically exposed persons must also be established. If doubts remain about whether the person to be identified acts on own account, or in cases, where it is obvious, the person does not act on own account, KfW will take reasonable and appropriate steps to obtain information about the real identity of the person for whom the customer acts. If politically exposed persons are involved in transactions, an immediate monitoring of the business relationship commences, including a background clarification of placed assets from a third party.
If reasonable doubts remain about whether a transaction offends Anti-Money-Laundering Rules after the background of the customer, the source of the money and the type of transaction have been considered, KfW decides about the termination of the business relationship in general. Suspicious transactions immediately have to be reported to the competent law enforcement authorities including the Financial Intelligence Unit (FIU) in Germany which has been created at the Federal Investigation Office (Bundeskriminalamt).
Both the internal audit division and the external auditors perform annual audits to establish whether the measures to combat money laundering are reasonable and appropriate and whether the KfW Anti-Money-Laundering Officer has acted in accordance with the responsibilities assigned to him.
Finally, KfW hereby certifies that the bank cannot be deemed a shell bank within the meaning of the US Patriot Act. Pursuant to the regulations of the U.S. Patriot Act KfW has prepared a Global Certification for use by any financial institution and offers its business partners the possibility to download its Global Certification Form.