11.03.2020 | KPMG Law Insights

Foreign trade law & export control – Observe AWV reporting obligation – Minimize fine risks and optimize costs with effective & efficient reporting processes

AWV reporting obligation – Minimize fine risks and optimize costs with effective & efficient reporting processes

As an accounting or treasury manager in companies with international business relationships, you are probably familiar with the notice on account statements regarding compliance with reporting requirements under foreign trade law. From our experts, you will learn what risks you should consider, where sources of error lie, and what opportunities exist to increase the effectiveness and efficiency of reporting processes.

The obligation to submit foreign trade reports is based on the provisions of Sections 63 et seq. of the Foreign Trade and Payments Ordinance (AWV). Accordingly, payment reports, stock reports and asset reports must be submitted to the Deutsche Bundesbank for the purpose of drawing up the balance of payments for the Federal Republic of Germany. Compliance with the reporting requirements is regularly audited by the Deutsche Bundesbank and by the customs authorities, irrespective of the industry. Incorrect, incomplete or late declarations constitute violations of the AWV and can be punished as administrative offenses by the customs authorities responsible for them. In accordance with the provisions on fines under § 19 para. 6 AWG, fines of up to EUR 30,000 per reporting violation are possible. In addition, company owners and executives may be sued for damages pursuant to Sec. § Section 130 OWiG (in conjunction with Section 9 OWiG) fines can be imposed for breaches of supervisory duties. It is also possible to sanction the companies concerned themselves by imposing association fines (Section 30 OWiG).

Based on our experience, we can divide the most common sources of errors into the following categories:

  • Ignorance and lack of clarity regarding the applicable regulations: The regulations of the AWV reporting system, which are substantiated and supplemented by numerous fact sheets and the “Explanatory Notes on the List of Services for the Balance of Payments” of the Deutsche Bundesbank, are extensive and complex. Since the audited companies are often unaware of the relevant regulations, it is not uncommon for audits to reveal numerous violations of reporting requirements. Due to the failure to deal with the regulatory provisions and the lack of employee training, there is often a lack of the know-how required to submit correct, complete and timely reports.
  • No clearly defined responsibilities: Due to a lack of guidelines, there is a lack of clarity regarding the reporting sheets to be completed and the departments and persons responsible for them. This often leads to the fact that reportable facts are not processed correctly and reports are not submitted at all, are submitted incorrectly or are submitted twice.
  • Process Weaknesses: In our experience, meeting regulatory requirements against the backdrop of the large number of reportable transactions with different reporting characteristics is one of the biggest challenges in the area of foreign trade reporting. Efficiency and cost pressures, a steadily increasing volume of documents and, last but not least, the short reporting deadlines mean that manual activities for preparing the reports must be reduced to a minimum. Often the potential of process automation is not recognized. Examples include the lack of use of system functionalities and a high level of manual effort in terms of recognizing the reporting obligation, deriving the reporting characteristics, and processing and aggregating data. Inefficiencies and potential errors are the result.
  • IT error sources: Increasing automation of reporting processes is always accompanied by additional, system-related risks that need to be monitored. Faulty or suboptimal system settings lead to the recording of reporting-relevant data being forgotten or the entry not being possible in the first place. Low data availability and reliability then leads to increased downstream compilation and control efforts. High data availability, on the other hand, which is essential for the automated derivation of reporting characteristics, entails the risk of incorrect interpretation of individual fields and field values. Likewise, sources of error lie in system reports and tools such as e.g. SQL routines used to identify reportable transactions and derive reporting characteristics.

KPMG creates transparency and thereby reduces risks and costs – with an individual approach aligned to your needs and the maturity of your reporting processes. We advise on regulatory requirements and identify your reportable issues, applicable reporting sheets, and existing reporting gaps. On the basis of the established facts, we support you in the preparation of subsequent notifications and, if necessary, examine the possibility of a voluntary self-disclosure in accordance with § 22 para. 4 AWG. When fine proceedings are initiated, we develop the necessary defense strategy and coordinate the proceedings and communication with the investigating authorities.

We also evaluate your data basis and availability as well as the technical maturity level and determine possible automation potentials. Based on this, we support you in defining, implementing and optimizing the reporting processes up to fully automated creation. To sustainably ensure the effectiveness of your reporting processes, we provide comprehensive training materials tailored to the target group, define guidelines and manuals, and advise you on possible quality assurance measures or a possible centralization of the reporting process organization.

Our range of services in the field of foreign trade reporting is wide – feel free to contact us with your individual questions!

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Anne-Kathrin Gillig

Frankfurt am Main Site Manager
Head of Compliance and Business Criminal Law

THE SQUAIRE Am Flughafen
60549 Frankfurt am Main

tel: +49 69 951195013

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