No automatic default after expiry of the deadline under Section 46 GwG
On February 25, 2025, the Higher Regional Court (OLG) of Frankfurt am Main made an important decision on the Money Laundering Act(case no. 10 U 18/24). Here are the main arguments of the ruling:
A bank had received two six-figure credit notes to a customer’s account and subsequently sent a suspicious activity report to the Financial Intelligence Unit (FIU). At the same time, the bank froze the value of the credit notes.
According to Section 46 (1) of the German Money Laundering Act (GwG), a reported transfer may be carried out at the earliest when the bank has the approval of the Financial Intelligence Unit (FIU) or the public prosecutor’s office or after three working days if the FIU or the public prosecutor’s office has not prohibited this.
On the one hand, the court confirmed that the bank had acted correctly by stopping the transactions and informing the FIU.
The customer instructed a lawyer before the deadline in Section 46 (1) of the German Banking Act (GWG) expired and the lawyer set a deadline for the bank to transfer the amounts to another account. In the legal dispute, the customer also demanded reimbursement of the lawyer’s costs.
The Higher Regional Court of Frankfurt ruled that a bank is only in default in connection with the Money Laundering Act if the deadline set in the lawyer’s letter has expired without result. The expiry of the deadline pursuant to Section 46 (1) GWG, on the other hand, does not constitute a default, as the bank may not act before the expiry of this deadline anyway.
This provision gives the bank a certain period of time to review the transaction and ensure that there is no money laundering. Only after this period has expired and a further deadline has been set in the lawyer’s letter can the bank be in default if it fails to take the required action.
