AML and CDD: fighting against Geldwäsche - The role of CDD in Anti Money Laundering with a focus on Germany

Abstract

Money laundering is an international widespread phenomenon, in which illegally generated funds are able to be smuggled into the legal economic cycle. In 2020 only, dirty money that has flown into the economy from illegal sources is estimated to amount between 2 and 5% of the World Gross Domestic Product. For decades now, anti-money laundering discipline has been grasping more and more attention of the governments and regulators. And this focus shows no signs of stopping, with new challenges brought by digitalisation and new actors (e.g Financial Technology - or FinTech - companies, Challenger Banks with new business models) entering a truly global and interconnected financial world. The aim of this master’s thesis is to present the EU Anti Money Laundering (AML) Directives and what characterises their evolution over time, with a focus on Customer Due Diligence (CDD) processes. The first and the second chapter will provide an introduction to the AML discipline, its evolution and its definitions. The third chapter will then provide a deep-dive into the evolution of the 4th to the 6th AML Directives at European level. The thesis will conclude with a fourth chapter on CDD and its evolution in the context of the directives outlined previously, focusing on the due diligence process in the German context.