Prohibition of money transfers by unregistered companies. Importance of compliance with the law on prevention of money laundering.

Our colleague Eva Camiña of the German law firm SCHRADE has achieved an important judicial victory at the Higher Regional Court of Hamburg (Oberlandesgericht Hamburg; hereinafter OLG) issued a sentence (no. 13 U 149/22) in favor of her client, a Spanish company (plaintiff) in a very significant case. The business model of many lawyers and tax advisors companies will be prohibited if the company does not have the corresponding authorization from the German financial authority (BaFin). Being a member of a regulated profession does not release the company in any way from the obligation to obtain an previous authorization according to § 10 ZAG (Zahlungsdiensteaufsichtsgesetz, Financial Services Supervision Act).

In this particular case, the defendant (German fiduciary tax advisor company), whose task it was to transfer the advance payment (EUR 1 million) of the buyer (Spanish company) to an account designated by the seller (Austrian company) did not have the mandatory BaFin authorization for financial services transactions required under § 10 ZAG. The advance payment, which was transferred to a company based in Dubai according to the instruction of the seller – without the knowledge of the buyer – could not be recovered, was lost.

The Hamburg Higuer Regional Court (OLG) considered it proven that the defendant did not have a control or compliance system in place to comply with the legal requirements of the money laundering prevention law. Without such a system, the defendant would not have been able to obtain the required authorizacion. The Court decided that the defendant had to pay compensation. German Courts are generally very reluctant to award a compensation for damages. In this case, Eva Camiña and her team convinced the Court and achieved a great success, for which we sincerely congratulate her.

Practical recommendation and advise to colleagues and companies who want to engage in this activity involving the transfer of money is to be cautious and to check, whether a special authorization is required

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