Category: Compliance

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Reporting on risk bearing capacity after the establishment of a bank


With their establishment credit institutions will face further reporting duties. After the German Ministry for Finance (Bundesfinanzministerium für Finanzen) has amended the “Verordnung zur Einreichung von Finanz- und Risikotragfähigkeitsinformationen nach dem Kreditwesengesetz“ (Finanz- und Risikotragfähigkeitsinformationsverodnung = Finance and Risk Bearing Capacity Information Regulation – FinanzRisikoV) of December 6, 2013 (last amendment December 19, 2014), credit institutions in Germany will be obliged to file reports on their risk bearing capacity.

Reporting Dates

On February 25, 2015 the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin) has enacted “Allgemeinverfügung zur Einreichung der Informationen zur Risikotragfähigkeit“ (GZ: BA 54 – FR 2204 – 2010 / 0004), which sets the reporting dates for risk bearing information reports of credit institutions, as follows:

“Kleinanlegerschutzgesetz”: The end for Crowdfunding and „Banking without a Bank“?

Crowdfunding, which by now is not only practiced in the Anglo-Saxon area, will already be stronger regulated in this year. In the recent years a market has developed in Germany, which offers individuals businesses typical of banks (e.g. Deposit and Credit Business as well as Financial Services) without the necessity to have (direct) business proceedings with a bank. Through commercial it was intended to make individuals believe, that it is possible to invest without a bank in a project and to achieve big profit out of it. On closer examination, it becomes clear that in most of the cases it is neither a classic crowdfunding project nor “banking without a bank”, since all crowdfunding marketplaces in Germany cooperate with a regulated partner (credit institution, payment service institution, or financial services institution). Proper prospectus are rare as well as information on a project once the public offering is finished.

Court Ruling of the BGH concerning the Definition of Deposit Business re left monies in Companies

The German Federal Court of Justice (Bundesgerichtshof – BGH), ruled in its decision recently that left monies in companies (in this ruling especially the German “GmbH & Co. KG”) may be regarded as deposit business for which a banking license is needed. Doing deposit business without such license may create a compensation claim and even can result in criminal penalties for the managing directors.

In this ruling the plaintiff – a member of a winemaker society – demanded compensation from the director of the debtor company (here a German GmbH & Co KG) for monies he left with the company.

Banking Business in Germany, 4th edition – now available

We did it again: The 4th revised edition of “Banking Business in Germany” is now available.


Also the new edition was developed in close cooperation between the Association of Foreign Banks in Germany (Verband der Auslandsbanken in Deutschland e.V.) and PwC.

The book’s subtitle tries to explain its ambition in one short sentence:

“A practical guide for foreign banks establishing a subsidiary or a branch in Germany”

True. But actually the book covers much more: It presents a current overview of the economic, regulatory, legal and tax framework that applies to credit institutions and financial service institutions in Germany.

Is as voluntary report of reporting failures possible for the reporting requirements pursuant to AWV and AWG?

Typically an administrative offence exists when a necessary reporting pursuant to the Foreign Trade and Payments Regulation (AWV) was conducted incorrectly, incompletely, not at all, or not in time.

According to the changed rules within the Foreign Trade and Payments Act (AWG), the prosecution of that administrative offence will be ceased if it is a negligent breach of law, the breach was revealed by way of self-monitoring and the responsible authority was notified. Moreover, it is necessary that adequate measures are taken to prevent a repeat failure for the same reason. Pursuant to Sect. 22 para. 4 clause 2 Foreign Trade and Payments Act a notification to the responsible authority will only be regarded as voluntary if the respective authority has not started any investigations, yet.

Licensing requirements under the Investment Code (KAGB) and the ongoing debate at EU level on the distinction of closed and open ended alternative investment funds (AIFs)

There is currently an ongoing discussion about the criteria of demarcation between closed and open ended funds between the European Commission and the European Securities and Markets Authority (ESMA). The determination of these criteria is relevant not only with regard to compliance obligations of the asset management companies – in particular with respect to rules related to liquidity management-, but also with regard to the application of the transitional provisions of the KAGB.

Licensing procedure: management has to commit sufficient time

In the future, in the course of the banking licensing procedure according to KWG (German Banking Act) it has to be proven  that the prospective managers of the institution are able to commit sufficient time to perform their functions. The license application has to include information according to which BaFin (German Federal Financial Supervisory Authority) can assess whether the managers are able to commit sufficient time to perform their functions. Especially the number of further directorships of the manager has to be given, as well as the expenditure of time which has to be donated to them. This has to be set into proportion to the time required for his management function in the new established institution.

Changes of Reporting Duties (Part 2)

Changes regarding reporting obligations pursuant to the German Foreign Trade and Payments Regulation (AWV)

Within the scope of the establishment of credit or financial institutions external sector statistics reporting is still to be observed. This topic is subject to substantial changes from July 2013 on.

From this date on the reports could only be filed electronically. Apart from that, the content of the reporting will be extended in order to meet the increased needs for information on both, national and international level. Additionally, there will be changes with respect to the persons subject to external sector statistics reporting obligations.

Changes of Reporting Duties (Part 1)

Extended Reporting Requirements based on the ‘Financial Information Regulation’

Within the context of the establishment of a credit or financial institution the proper compliance with the German reporting regulations has to derive already from the respective application documentation. That means, one should deal with the German reporting duties at a very early stage. Even EU-Branches pursuant to Sect. 53b German Banking Act should be aware of German reporting requirements since they are also obligated to submit regulatory reports to a certain extent.

Requirements for licensing of alternative investment funds managers (AIFM) – Part 1

Funding required for running the business
As already posted on June 2012 (see below), from July 2013 on all collective investment schemes, which are not already covered by the UCITS Directive [Directive for the regulation of collective investment undertakings; Directive 2009/65/EC] are regulated by the AIFMD. Therefore fund managers of so-called “alternative” funds, such as private equity funds or hedge funds generally are required to obtain a license for their activities.

There are numerous requirements that have to be met in order to obtain an AIFM-license by the Federal Financial Supervisory Authority (BaFin). One of these conditions is the availability of adequate capital.