AMLA – The European Money Laundering Authority comes to Frankfurt

FRANKFURT – On 22 February 2024, the representatives of the Council and the European Parliament decided that the seat of the future European Anti-Money Laundering Authority (AMLA) will be in Frankfurt am Main.

The AMLA, a new EU-wide authority with responsibilities around money laundering compliance and financial sanctions monitoring, will significantly change the way money laundering and sanctions laws are enforced within the EU. Therefore a review of existing policies and processes in the area of money laundering prevention should be undertaken immediately.

1. Introduction and subject matter

The Anti-Money Laundering Authority, which the European Parliament and the European Council agreed to establish on 13 December 2023, is expected to take up its activities in Frankfurt am Main in mid-2025. Its main tasks will be as follows:

(1) Direct supervision of anti-money laundering compliance for certain European banks and other high-risk financial service providers, including crypto-asset service providers.
(2) Ensuring compliance with financial sanctions.
(3) Indirect supervision of other obliged entities. While these entities are primarily supervised by national regulators, the AMLA will mediate disputes between national regulators and may assume supervision in exceptional circumstances.
(4) Coordination of Member States’ efforts to combat money laundering and terrorist financing in the non-financial sector.

The AMLA will directly supervise certain European banks and other financial service providers that operate across borders or are considered “high-risk”. A total of up to 40 organisations will be included in the initial selection process in Germany – around 200 companies across Europe. This direct supervision will be carried out by joint supervisory teams under the direction of the AMLA, which will carry out assessments and inspections. The list of companies designated for supervision or inspection will be reviewed every three years.

As part of the AMLA’s direct supervisory powers, the AMLA will ensure that these selected obliged entities have appropriate internal policies and procedures in place to ensure the implementation of targeted financial sanctions, such as asset freezes and asset seizures.

The AMLA will also have certain enforcement powers. In the event of serious, systematic or repeated violations of directly applicable requirements, the AMLA will be able to impose financial sanctions on the selected obliged entities.

For obliged entities in the financial sector that are not designated as “selected obliged entities”, money laundering supervision will mainly remain unchanged at national level.

In relation to the non-financial sector, the AMLA will provide support by conducting inspections and investigating possible breaches in the application of money laundering prevention rules. In doing so, it will be able to issue non-binding recommendations.
The AMLA will also coordinate the national financial intelligence units that investigate suspected violations of money laundering regulations.

The AMLA will mediate and settle disputes between national supervisory authorities and may also take over the supervision of a financial undertaking in exceptional circumstances or in the event of certain breaches of EU law.

2. Procedure for supervision until the AMLA commences its activities

Even before it was clear that the AMLA was coming to Frankfurt, we had already seen a significant increase in the focus of the German Federal Financial Supervisory Authority (BaFin) on auditing our clients in the area of money laundering prevention. In its report “Risks in Focus for 2024”, BaFin emphasises that it continues to classify the risk of being misused for money laundering, terrorist financing or other financial crimes in Germany as “high” for the more than 8,700 persons obliged to do so under the German Money Laundering Act (GWG).

In 2022, a total of 337,186 suspected money laundering reports were received by the Financial Intelligence Unit (FIU). Of these, a total of 326,123 originated from the financial sector from financial market participants such as credit and financial services institutions.

International financial transactions, for example in the export sector, are a particular contributor to the risk of money laundering. Fast-growing companies are also exposed to particular money laundering risks. Last but not least, crypto assets open up unprecedented opportunities for criminal activities.

BaFin’s repeated warnings about failures by some institutions in the area of money laundering prevention, including severe fines (most recently €6.5 million), are also increasing significantly in both their number and severity.

It is noticeable that the market is still reluctant to invest in money laundering prevention and to initiate the necessary projects and measures.

3. Direct recommendations

Against this background, we strongly recommend that you scrutinise your existing guidelines and processes in the area of money laundering prevention. Our experience has shown that there is considerable potential for improvement in order to prevent BaFin sanctions, while at the same time streamlining internal processes and thus increasing their efficiency.

In BaFin’s opinion, some business models, such as payment agents, third-party acquiring, white labelling, loan fronting and trading in crypto assets, are particularly vulnerable. If you are active in these areas and have not been subject to a special audit by BaFin in recent years, this recommendation is all the more urgent.

Feel free to contact us! We are not only very experienced in scrutinising your existing guidelines and processes, identifying and implementing potential for improvement, but are also happy to assist you with projects or (special) audits by the supervisory authority. We can also act as an outsourced money laundering officer for you.

4. Outlook

There is still some uncertainty as to whether the European Public Prosecutor’s Office, an “ad hoc sanctions authority” or the AMLA should be given a role in enforcing sanctions for breaches of anti-money laundering rules or sanctions imposed. While Members of the European Parliament have repeatedly pushed for “substantial developments” in sanctions enforcement, the European Commission and Member States have generally resisted any serious change. In particular, Member States have endeavoured to keep the enforcement of sanctions entirely within their competence.
Although the AMLA will only start its work once all political issues have been resolved, the industry needs to be aware of the upcoming changes in the monitoring and enforcement of money laundering and financial sanctions and prepare accordingly.

The European Sustainability Reporting Standards (ESRS) under the CSRD are coming – “to dos” for companies

The new reporting obligation under the Corporate Sustainability Reporting Directive (CSRD) begins in the 2024 financial year for all companies already covered by the Non-Financial Reporting Directive (NFRD). The report must be submitted for the first time in 2025 for the year 2024; for numerous other companies, the reporting obligations will begin between 2025 and 2028.

I. Introduction

In the European Sustainability Reporting Standards (ESRS), the European Commission has drawn up binding guidelines on the structure and content of the report. Below we provide a brief overview of the structure and content of the ESRS.

In Germany, the CSRD is being implemented with the CSR Directive Implementation Act (CSR-RUG). This ensures that companies deal with the implementation of the law in good time and collect the data required for reporting in the legally prescribed form. After all, those who “lag behind” here will not only suffer a negative impact on the company’s (ESG) rating, making it less attractive to investors – not to mention the reputational damage. In addition, violations are punishable by fines; the amounts range from 50,000 euros to 10 million euros – or even 5% of the annual group turnover.

It is therefore advisable to stay “ahead of the curve” – not only to avoid fines, but also and especially to remain or become attractive to investors, customers and even skilled workers.

II. What is it all about?

The CSRD is a European directive that aims to improve corporate reporting on sustainability aspects and thus replace the Non-Financial Reporting Directive (NFRD). Companies already required to report under the NFRD will have to report for the 2024 financial year in 2025. From the 2025 financial year, new companies that fulfil the respective size criteria will be added annually.

However, the CSRD does not regulate the content and structure of the reports to be submitted. These contents and structure are bindingly defined in the Delegated Regulation on the first sentence of the ESRS published by the European Commission on 31 July 2023 in order to ensure the comparability of sustainability reports.

Unfortunately, it cannot be said that the European Commission has succeeded in drafting these standards in a clear, easy-to-understand and concise manner. On the contrary: companies subject to reporting requirements are facing an immense amount of work in order to fulfil their reporting obligations from 2025. We recommend that every company begins to familiarise itself intensively with the ESRS at least 18 to 24 months before the end of the financial year for which it is required to report for the first time. Only in this way can it ensure that it collects the required data for the reporting year in a way that meets the requirements of the first 12 (!) published ESRS standards – more will follow.

These twelve published standards comprise two overarching standards and five topic-related standards on environmental topics, four topic-related standards on social topics and one topic-related standard on governance topics. In terms of content, these standards are based on the requirements of the Corporate Sustainability Reporting Directive (CSRD) and structurally on the structure of the Task Force on Climate-related Financial Disclosures (TCFD) with the reporting elements “Governance”, “Strategy”, “Risk Management” and “Key Figures and Targets”.

Sustainability aspects must be reported on the basis of the principle of “dual materiality”. Information on a sustainability aspect must therefore be disclosed if it is considered material either from an impact perspective (effects of business activities on the environment and society) or from a financial perspective (financial effects of sustainability-related risks and opportunities) or from both perspectives.

III. Who has to report for which financial year and when?

The scope of the ESRS depends on the following key figures, which are subject to reporting requirements:

(1) from the 2024 financial year in the 2025 annual report: companies that are already subject to a reporting obligation under the Non Financial Reporting Directive (“NFRD”);

(2) from the 2025 financial year in the 2026 annual report: All other large corporations that meet at least two of the following three criteria: (1) at least 250 employees on an annual average, (2) total assets of at least EUR 20 million, (3) turnover of at least EUR 40 million;

(3) from the 2026 financial year in the 2027 annual report: Listed SMEs as well as small and non-complex credit institutions and captive insurance companies; and

(4) from the 2028 financial year in the 2029 annual report: third-country companies with subsidiaries or branches in the EU. This only applies if the threshold of EUR150 million net sales in the EU is exceeded over a period of two years.

IV. Structure of the ESRS

The ESRS requires companies to analyse their sustainability performance in depth, in some cases right through to the supply chain and the end of the product life cycle. Mandatory ESRS indicators of a qualitative and quantitative nature, as well as reliable information on the development of a company’s own sustainability performance, make companies much more accountable than before. The ESRS are divided into three categories that complement and interact with each other:

a) Cross-cutting standards that cover general concepts and principles for the preparation of sustainability statements and contain overarching disclosure requirements.

b) Topical standards, each of which covers a specific and clearly defined sustainability topic, i.e. disclosure requirements in relation to sustainability-related impacts, risks and opportunities that are considered material for all companies regardless of specific sectors.

c) Sector-specific standards that cover the disclosure of information on sustainability-related impacts, risks and opportunities that are considered material for all companies in a particular industry (not yet published).

V. ESRS: Overarching standards

ESRS1 General requirements

ESRS 1 prescribes binding concepts and principles that apply to the preparation of sustainability statements in accordance with the CSRD. All material information on sustainability-related impacts (effects of business activities on the environment and society), risks and opportunities should be disclosed in the sustainability statements in accordance with the applicable ESRS. The ESRS prescribe reporting in accordance with standardised, sector-independent and sector-specific disclosure requirements, supplemented by company-specific disclosures that are to be developed in accordance with the principles set out in ESRS 1.

ESRS2 General disclosures

ESRS 2 builds on the content of the requirements in ESRS 1 General Requirements and contains overarching disclosure requirements for the sustainability statement.

VI. ESRS: Thematic standards on environmental issues

E1 Climate change

This standard provides disclosure requirements that enable the addressees of a company’s sustainability statements to understand the following aspects (non-exhaustive list): The company’s plans and ability to adapt its strategy and business model in line with the transition to a sustainable economy and to contribute to limiting global warming to 1.5 degrees Celsius.

E2 Environmental pollution (Pollution)

This standard provides disclosure requirements to enable users of an organisation’s sustainability disclosures to understand the following aspects (non-exhaustive list): All measures taken to prevent, mitigate or remedy actual or potential negative impacts and to manage risks and opportunities and the results of these measures.

E3 Water and marine resources

The standard provides for disclosure requirements that are intended to enable users of a company’s sustainability statements to understand whether, how and to what extent the company contributes to the following points:

a) Ambitions of the European Green Deal for fresh air, clean water, healthy soil and biodiversity and to ensure the sustainability of the blue economy and the fisheries sector,

b) EU Water Framework Directive,

c) EU marine strategy framework,

d) EU directive on maritime spatial planning (EU maritime spatial planning directive),

e) UN Sustainable Development Goals (SDGs) 6) Clean water and sanitation and 14) Life below water.

E4 Biodiversity and ecosystems

The standard provides for disclosure requirements that should enable the addressees of a company’s sustainability statements to understand the following aspects (non-exhaustive list): The nature, type and extent of the company’s material risks, dependencies and opportunities related to biodiversity and ecosystems, and how the company manages them.

E5 Resource use and circular economy

The standard stipulates disclosure requirements that should enable the addressees of a company’s sustainability statements to understand the following aspects (non-exhaustive list): The financial implications for the company of the material risks and opportunities arising in the short, medium and long term from the company’s impacts and dependencies in relation to resource use and the circular economy.

VII. ESRS: Thematic standards on social issues

S1 Own workforce

The financial impact on the company of the main risks and opportunities arising in the short, medium and long term from the company’s impacts and dependencies in relation to its own workforce.

S2 Workers in the value chain

The nature, type and extent of the company’s material risks and opportunities relating to labour impacts and dependencies in the value chain, and how the company manages them.3S2 Workers in the value chain

S3 Affected communities

Significant positive and negative actual or potential impacts of the organisation on communities in areas where impacts are most likely and severe.

S4 Consumers and end-users

All measures taken to prevent, minimise or eliminate actual or potential impacts and deal with risks and opportunities as well as the results of these measures.

VIII. ESRS: Topic related standards on governance topics

G1 Business conduct

The standard provides disclosure requirements to enable the recipients of a company’s sustainability statements to understand the company’s strategy and approach, its processes and procedures, and its performance in relation to corporate policy.

IX. Outlook

In addition to the development of the first twelve ESRS as “Set 1”, the CSRD also envisages further work packages for EFRAG. The first sector-specific ESRSs are to be developed for a total of around 40 different industries. The development of specific listed SME ESRSs is also planned for the future reporting obligations of capital market-oriented small and medium-sized enterprises (SMEs) within the scope of application. Voluntary guidelines are to be developed for non-capital-market-oriented SMEs. Specific third-country ESRS are also to be developed for the reporting of third-country companies outside the EU. However, a timetable for the publication of these drafts has not yet been set.

Please do not hesitate to contact us if you have any questions. We specialise in the realisation and implementation of compliance-related IT projects in the financial regulatory environment.

Reorganisation: Experienced and well-established ACT team responsible for the self-administration of Alpha Real Estate Holding and 13 subsidiaries

Alexander Höpfner, Sven Tischendorf and Felix Melzer as well as Tara Kamiyar-Müller (Real Estate) have been responsible for the self-administration of the Germany-wide asset and investment manager and leading company in the privatisation of residential real estate – Alpha Real Estate Group – since 27 November 2023.

The entire property and construction industry in Germany is currently struggling with the consequences of high interest rates, rising construction costs and uncertainty in the face of falling property prices. In recent months, for example, the major nationwide property project developer Gerch and Euroboden in Munich, Nuremberg-based Project Immobilien and the Düsseldorf-based property companies Centrum and Development Partner have already had to file for insolvency.

Due to the economic challenges posed by the war in Ukraine, the energy crisis and, in particular, the drastic rise in interest rates and the resulting restraint on the financing and investment market, Alpha Real Estate’s business model has now also found itself in a precarious situation. business model of Alpha Real Estate also found itself in a precarious situation, which led to liquidity bottlenecks and the need for comprehensive restructuring.

With the subsequent applications for self-administration for Alpha Real Estate Holding and 13 of its subsidiaries, which the Mannheim Local Court decided in favour of, the starting signal has now been given for successful and far-reaching restructuring and reorganisation measures towards a repositioning and realignment in the current market. Jens Lieser from the insolvency law firm Lieser Rechtsanwälte, which specialises in insolvency law, has been appointed as provisional administrator.

With a transaction volume of 1.4 billion and a portfolio of 350 thousand square metres of residential and commercial space, the Mannheim-based investment house has been successfully designing and developing investment properties for private investors, tenants and owner-occupiers as well as institutional investors throughout Germany for 10 years with its full-service concept. Alpha Real Estate’s range of services covers the entire property value creation process, from buying and selling to active and value-enhancing asset and property management.

The ACT team is optimally positioned for the planned reorientation, as in addition to the well-known insolvency and restructuring practice of Sven Tischendorf and Alexander Höpfner, the strong expertise of the ACT Real Estate division under the leadership of Tara Kamiyar-Müller, which focuses on special property law situations/restructurings, will also be deployed here.

Alpha Real Estate self-administration:
act legal Germany (act AC Tischendorf Rechtsanwälte), Frankfurt: Dr. Alexander Höpfner (lead, general representative, CIO), Dr. Sven Tischendorf, MBA (lead, general representative, CRO), Dr. Felix Melzer (general representative, restructuring), Dr. Tara Kamiyar-Müller (real estate restructuring), Dr. Fabian Laugwitz, MBA, LL.M. (real estate, commercial)

act legal Germany advises the shareholders of CRS medical on the sale to Asker Healthcare Group, Sweden

act legal Germany (act AC Tischendorf Rechtsanwälte) has provided legal and tax advice to the shareholders of CRS medical GmbH (“CRS medical“) on the sale of all shares in CRS medical to Asker Healthcare Group (“ASKER“).

CRS medical has been providing services in the field of medical technology since 2004. Many years of experience and extensive knowledge in the medical technology sector have made CRS medical a dynamic and powerful medium-sized company. With over 210 employees, CRS medical is now represented on almost every continent in the world.

Headquartered in Sweden, ASKER now consists of more than 30 companies in 14 countries and 2,400 employees, supporting healthcare providers and patients to improve patient outcomes, reduce the total cost of care and ensure a fair and sustainable value chain.

CEO and founder Michael Schlapp will remain with the company in his operational role. The parties have agreed not to disclose further details of the transaction.

With more than 300 professionals throughout Central Europe act legal offers sophisticated national as well as international legal advice – the attractive alternative to large international law firms.

Advisors CRS medical: act legal Germany: Christoph O. Breithaupt, M.B.L. (HSG) (Private Equity/Corporate), Sandra Brieske (Private Equity/Corporate), Dr. Stephan Schwilden, MBA (Employment law), Dr. Florian Wäßle, LL.M. (IT/IP), Dr. Fabian Laugwitz, MBA, LL.M. Eur. (Real Estate); Dr. Frank Bayer (frb-tax, Tax)

Strong for the future – Outpatient care service provider Dignicare Pflege GmbH restructures itself in self-administration

Dr Alexander Höpfner, DigniCare’s trustee: “I see a concrete need for care services, a business model that is in demand on the market and opportunities for restructuring that are also in the interest of the creditors”.

Due to the high shortage of labour and skilled workers in the care sector as well as a decline in sales of private cost coverage for certain care and nursing services, the outpatient care service with around 200 employees at 14 operating sites nationwide got into financial difficulties. Within the framework of self-administration and under the constructive support of the restructuring process by the restructuring experts of LIESER Rechtsanwälte Partnerschaft mbB and act legal Germany (act AC Tischendorf Rechtsanwälte), who are particularly experienced in the area of nursing services/hospitals, the outpatient nursing services can be continued without restriction and interruption and the wages and salaries of the employees can be secured via insolvency benefits.

Property administration: act legal Germany – Dr. Alexander Höpfner (property administrator), Dr. Felix Melzer, Maximilian Dieler (both restructuring/insolvency)

For additional information see also our LinkedIn article (in German language only): https://www.linkedin.com/posts/ac-tischendorf-rechtsanwaelte_zukunftsstark-pflegesektor-sanierung-activity-7105924240507351040-vaXw?utm_source=share&utm_medium=member_desktop

Dr. Sven Tischendorf, MBA (self-administrator) and Dr. Alexander Höpfner (self-administrator) ensure the successful conclusion of the insolvency proceedings of the Salamander Klauser shoe stores via an investor solution

Dr Sven Tischendorf in the function of CRO, Dr Alexander Höpfner in the function of CIO and Dr Christian Holzmann in the function of administrator have been responsible for the self-administration of the traditional German companies Salamander Klauser since 13 December 2022.

The shoe chains Salamander and Klauser Schuhe were taken over in 2016 by the parent company Ara, which is backed by the Röseler family of entrepreneurs. Ara manufactures shoes itself and also owns other shoe brands, such as Lloyd or Lurchi.

The unfortunate combination of the negative effects of the COVID-19 pandemic and the economic turbulence triggered by the Ukraine war had put a heavy strain on Salamander’s and Klauser’s retail business.

In the past months of the self-administration proceedings, the restructuring experts Dr. Sven Tischendorf and Dr. Alexander Höpfner, each as managing director, together with the two Salamander/Klauser managing directors Jens Keller and Jens Peter Klatt, got the company back on track by immediately stabilising business operations and successfully realigning it.

In parallel to the operational tasks and the securing of stable financing, an investor process was initiated on the part of the owner and property management with the aim of acquiring new owners with a sustainable continuation strategy by autumn 2023.

Within the framework of this investor process, the Prime Footwear investor group prevailed over other renowned strategists and financial investors. Prime Footwear Investors AG is an association of experienced managerial personalities with profound knowledge of the shoe industry as well as renowned retail experts: Franz W. Wiest (transformation expert), the Brandstetter-Finger family (organisational consultant with shoe retail background) as well as Convergenta Beteiligungsgesellschaft are the new main shareholders.

In addition, the entrepreneurs Peter Prange (former owner of Salamander/Klauser), Günter Althaus (EX-CEO ANWR Group) and Lothar Schäfer (EX-CEO of Adler Modemärkte and AppelrathCüpper) are also involved.

Both the timing and the outcome of the investor process have exceeded expectations, in particular due to the currently very fragile market environment in the branch-based shoe retail sector. As a result, the majority of the approx. 1,000 jobs will be secured both in the now total of 65 branches as well as in the head office and logistics at the Wuppertal location.

The investor group has become a shareholder in Salamander and Klauser via an insolvency plan. After the creditors have approved the insolvency plans submitted to Salamander and Klauser on the occasion of discussion and voting meetings held on 15 September 2023, the Local Court of Wuppertal will terminate the insolvency proceedings in the near future.

The aim is now to achieve/ensure the operational transition until the formal termination of the proceedings. In order to ensure a smooth transition, the team around Sven Tischendorf and Alexander Höpfner will continue to be available to the new owner of Salamander and Klauser.

With a large number of market-renowned self-administration proceedings already successfully concluded in 2020-2022, act AC Tischendorf’s insolvency and restructuring practice, led by partners Dr Sven Tischendorf, MBA and Dr Alexander Höpfner, is one of the market leaders in Germany.

Salamander/Klauser self-administration: act legal Germany (act AC Tischendorf Rechtsanwälte, Frankfurt) – Dr Sven Tischendorf, MBA, Dr Alexander Höpfner (both restructuring managing directors); Dr Felix Melzer (insolvency law, restructuring); Dr Tara Kamiyar-Müller (real estate); Dr Fabian Laugwitz, MBA, LL.M. Eur. (Commercial); Dr. Nina Honstetter (Labour Law); Maximilian Dieler (Insolvency Law, Restructuring)

Great news – Welcome SKYE Partners

We are delighted to announce that as of 1 July 2023, act legal Germany (“ACT”) and SKYE Partners (“SKYE”) have merged.

This merger creates a market-leading 360-degree point of contact practice for private equity funds and their portfolio companies on the German legal market. 

SKYE has an outstanding reputation in the private equity industry for its efficient support of small and mid-cap private equity transactions. In particular, this applies to sophisticated primary transactions, on both the buy and the sell side, the implementation of buy and build strategies, and other transaction-relevant issues.

ACT has been a trusted partner for the vast majority of the leading private equity funds for several years focusing on distressed and mid-cap transactions, special situations, and restructurings as well as in the high-performance support of PE portfolio companies in their day-to-day business.

The five-member SKYE team, headed by Founding Partner Christoph Breithaupt, will further expand the segment of leveraged buyout transactions at ACT. In addition to Christoph Breithaupt, who will hold the position of Equity Partner at ACT, Julia Rosigkeit, who was Counsel at SKYE, will also become a Partner.

ACT’s partner circle includes many of the market’s best-known advisors, including, among others: Dr. Sven Tischendorf (distressed M&A, Special Situations, and Restructuring), Dr. Fabian Brocke and Dr. Nina Honstetter (both M&A, Private Equity, and Corporate), Dr. Matthias Müller (distressed M&A, Private Equity, and Corporate), Dr. Tara Kamiyar-Müller (Real Estate transactions), Dr. Alexander Höpfner (StaRUG and Self-administration Proceedings), Dr. Stephan Schwilden and Dr. Friederike Jawad (both Labor Restructuring), Dr. Michelle Wiesner-Lameth (Compliance), Marcus Columbu (Finance), and Dr. Marco Loesche (a notary with extensive transaction expertise).

Together, the combination of ACT and SKYE will support the private equity industry in Germany with some 40 lawyers and business professionals. Additionally, ACT and SKYE will be represented internationally with 11 offices across Europe, and more than 100 experienced private equity lawyers present in all major European economic centers.

ACT and SKYE have already worked together for many years on a great number of successful transactions and look forward to bringing their collaboration to the next level through this exciting merger.


Very welcome SKYE Partners!

“game • set • action” – ACT Frankfurt Open 2023

Our first serve to the first ACT tennis event was a terrific success. Everything was perfect, our guests, the food, the location, the fair play and the atmosphere. An unforgettable afternoon and evening that we will remember for a long time and guaranteed … to be continued…

ECJ obliges companies to comply with comprehensive information obligations and organisational measures in the event of data protection deletion requests – Need for action and implementation in corporate practice

Overview

The European Court of Justice (ECJ) has ruled that companies which process personal data
(= data controllers in the sense of the GDPR) to take appropriate technical and organisational measures to ensure that they inform other data controllers about the assertion of data subject rights (Chapter 3 of the GDPR).

Previous practice

So far, the obligations under Art. 19 GDPR (notification obligation in connection with the rectification or erasure of personal data) have been interpreted rather restrictively and assumed to impose only a limited obligation on controllers.

Interpretation in accordance with the ECJ ruling

According to the ECJ ruling of 27 October 2022, the notification obligation of Art. 19 GDPR also extends to those controllers from whom personal data have been received. It is then the responsibility of this controller to take appropriate technical and organisational measures to inform both recipients of data and the original source about the revocation. The controller therefore has a comprehensive duty to inform about a data subject’s request for deletion. They must practically involve all other parties in the information chain about the request for deletion or a revocation of data protection consent to the processing and disclosure of personal data.

Conversely, data subjects have the right to choose which controller they address a request to within a processing chain.

Implementation

This broad interpretation of the ECJ means that data controllers must ensure compliance with data subjects’ rights in “all directions”. In fact, this means a comprehensive record of where personal data comes from and to whom it is disclosed.

These requirements can only be ensured and proven through precise and up-to-date documentation of the processes in question (data mapping) in a directory of processing activities (Art. 30 GDPR) and an accompanying organisational guideline.

We have extensive experience in the design of the prescribed documents and know how to implement them in a legally compliant and effective manner – in line with your corporate culture.

Feel free to contact us at any time.