Persons involved in the KYC process

The obligation to identify individuals is a fundamental component of the due diligence obligations to be exercised under the Money Laundering Act. However, this obligation applies not only to the contractual partner but also to any person(s) acting on behalf of that contractual partner. According to §10 para. 1 no. 1 GwG, the obliged entity is required to do two things with regard to any person who may appear.

First, identification in accordance with Section 11 Paragraph 4 and Section 12 Paragraphs 1 and 2 of the Money Laundering Act (GwG). This refers to the collection of the necessary information and its verification using suitable documents.

The necessary information is that which must also be collected in relation to the contracting party if that party is a natural person:   

• the first and last name,  
• the place of birth,  
• the date of birth,  
• nationality and  
• a residential address.

The Money Laundering Act does not specify who qualifies as a person acting on behalf of the company and therefore must be identified. This is clarified by the supervisory authorities, who are obligated under Section 51 Paragraph 8 of the Money Laundering Act to publish interpretive and application guidelines (AuA), including on the topic of due diligence obligations.

The BaFin, the supervisory authority in the financial sector, states regarding the characteristics of a person appearing that “it concerns the person who claims to be acting on behalf of the contracting party.. "

Furthermore, BaFin specifies which individuals must be identified. These include legal representatives such as parents or, in the case of a GmbH (limited liability company), the managing director. Representatives appointed by legal transaction must also be identified. This includes, among others, those acting with a power of attorney, for example, in the form of a commercial power of attorney (Prokura). In both cases, according to BaFin, the individual must be vetted, at least when establishing a business relationship. 

The Darmstadt Regional Council holds a similar view in its AuA fixed for goods traders, real estate agents and other non-financial companies.

Furthermore, the obliged entity must determine whether the person acting on behalf of the contractual partner is actually authorized to do so. The Money Laundering Act does not provide any further details in this regard. 
BaFin considers the eligibility check for payments to be already fulfilled by the civil law eligibility check.

The Darmstadt Regional Council provides examples in its AuA (Authorities and Authorizations) that can be used to determine eligibility, such as from the commercial register or the written power of attorney. 

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