Geldwäschegesetz (GwG)

The Geldwäschegesetz (GwG) is the German Anti-Money-Laundering Act, the national transposition of the EU's AML directives. Watch dealers are explicitly named Güterhändler under § 1 GwG and fall under the law's obligations whenever a transaction crosses defined cash or value thresholds.

When the GwG applies to a watch dealer

Three trigger thresholds matter:

• €10,000 in cash, single transaction. Identification, source-of-funds inquiry, and record-keeping are mandatory.
• €2,000 in cash for high-risk obligated parties (e.g., precious-metal dealers) — the lower threshold can apply when watches with precious-metal content are paid in cash.
• Connected transactions that together exceed €10,000. Splitting a single sale into multiple cash payments to avoid the threshold is itself a GwG violation.

Non-cash payments (bank transfer, card) do not trigger the cash threshold but do trigger general due diligence at higher value bands and for suspicious patterns.

What dealers must do at the threshold

• Identify the counterparty. Government-issued ID (passport, ID card). Record the document type, number, issuer, and validity. Make a copy for the file.
• Identify the beneficial owner if the buyer is a corporate entity, including ownership percentages above 25 percent.
• Document the business relationship purpose and source of funds. For watch purchases this can be brief but must be recorded.
• File a Verdachtsmeldung (suspicious activity report) with the FIU (Zentralstelle für Finanztransaktionsuntersuchungen) if the transaction looks suspicious — unusual urgency, refusal to identify, mismatched profile, etc. Filing is mandatory regardless of whether the transaction completes.
• Retain records for 5 years after the transaction or end of business relationship.

Risk management framework

Under § 4 GwG dealers must have a written Risikoanalyse (risk analysis) appropriate to the business size:

• Customer-risk profile (private vs corporate, geographic factors, payment methods).
• Watch-category risk (high-value, easily portable, anonymous resale market).
• Internal controls (training, named compliance officer for larger businesses).

For a small watch dealer with mostly digital payments, the framework is short but must be on paper and reviewed at least annually.

Penalties

GwG violations carry significant administrative fines: up to €100,000 per violation for ordinary breaches, up to €5 million or 10 percent of annual turnover for serious or repeated violations. Beyond fines, repeated violations can lead to a trade-license revocation under § 35 GewO.

For ChronoDesk-style dealer software, GwG compliance affects how the application captures buyer information, how cash transactions are flagged, and how records are retained — see also Kassenbuch for the cash-tracking interaction.

Related: kassenbuch, ankaufsrechnung, bill-of-sale, betriebspruefung.