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By Phillipe D. Winterstein – German Attorney at Law at WINHELLER
WINHELLER Attorneys at Law & Tax Advisors
Frankfurt

The establishment of a branch in Germany offers European companies an undreamt-of advantage. This advantage will be revealed below. Furthermore, the relevant supervisory law for the establishment of a subsidiary in Germany will be examined.

Freedom of permission for the establishment of a subsidiary

An institution domiciled in an EU member state or another signatory state to the Agreement on the European Economic Area may establish a subsidiary in Germany and provide payment services via it without the permission of the Federal Financial Supervisory Authority (BaFin). The prerequisite for this is a license already granted abroad to the company establishing its subsidiary.

Comprehensive list of tasks through the German Money Laundering Act

Although companies from other European countries do not need a permit to establish a subsidiary, they should observe the numerous supervisory obligations under German law:

According to the German Money Laundering Act (Geldwäschegesetz – AMLA), this primarily includes the creation of appropriate internal security measures and compliance with special due diligence obligations to prevent money laundering and terrorist financing.

In particular, it is also necessary to analyze the risks arising from the company’s business activities and to document them.

Furthermore, a money-laundering officer must be appointed at management level to ensure that the company observes the supervisory obligations of the AMLA.

Automated account retrieval procedure

In addition, foreign companies are obliged to keep a data record with all master data of the accounts they hold in Germany as well as the corresponding customers available. BaFin must have access to this record at all times. The data must comply with a strictly specified format. This also serves to prevent money laundering and terrorist financing.

Remedying complaints

Furthermore, companies wishing to provide financial services in Germany must set up a procedure to deal with complaints from their German customers. This procedure must meet the specific requirements of the German Payment Services Supervision Act (Zahlungsdiensteaufsichtsgesetz – ZAG).

Advice on a subsidiary in Germany

Companies in other European countries can benefit from the freedom of approval if a subsidiary is established in Germany. Nevertheless, they are subject to far-reaching banking supervisory obligations, the precise fulfilment of which is imperative. Our specialist attorneys for banking and capital markets law will be pleased to assist foreign companies in successfully establishing their subsidiaries in Germany. Our experts will also be pleased to assist you as compliance advisors.