The German cabinet adopted the draft Sanctions Enforcement Act II on 26 October 2022. The bill, which was prepared jointly by the Federal Ministry of Finance and the Federal Ministry for Economic Affairs and Climate Action, reorganises the German government’s structures for enforcing sanctions. In the future, sanctions will be implemented even more effectively. The German Bundestag adopted the Sanctions Enforcement Act II on 1 December 2022, and the Bundesrat approved the act on 16 December 2022.
The Sanctions Enforcement Act I, which took effect in May 2022, provided the legal basis to swiftly implement measures such as introducing new powers for investigating and freezing assets. The Sanctions Enforcement Act II made structural improvements to (a) the operative enforcement of sanctions and (b) anti-money laundering measures.
Sanctions will be implemented more effectively in the future in order to ensure that they have a swift impact and help defend peace in Europe. The Act also reinforces Germany’s efforts to fight money laundering, with far-reaching measures and a strategic shift to the “follow the money”principle.
What specific improvements are resulting from the legislation?
- Establishment and expansion of the Central Office for Sanctions Enforcement as of 1 January 2023. The Central Office’s remit includes investigating and freezing assets and coordinating sanctions enforcement.
- A register of sanctioned persons and entities and their assets that makes it easier to trace ownership information.
- Basic land registry data on owners, land parcels and land register files are added to the transparency register and assigned to the legal entities listed there.
- Establishment of a centralised system for submitting tip-offs about potential crimes.
- United Nations sanctions lists apply automatically in Germany (for a temporary period of up to five days) in order to prevent delays in the enforcement of sanctions.
- Cash payments for real estate are no longer permitted. This will minimise money laundering risks in the real estate sector.
In August 2022, Finance Minister Christian Lindner unveiled the outlines of a plan to fight financial crime and enforce sanctions more effectively in Germany. One of the main components of the plan is to pool the most important powers within the remit of a new federal authority.