Ruling [DE] ¦ KYC obligations can’t trump equal treatment

Bank Found to Have Discriminated Against Trans Customer: AG Berlin-Mitte Rejects AML Justification

A Berlin court has held that a bank unlawfully discriminated against a trans customer by delaying her first-name and salutation change for months and demanding extra documentation not required in comparable cases. In a judgment dated May 14, 2025 (AG Berlin-Mitte, 23 C 14/25; not yet final), the court awarded €2,000 in non-material damages under the General Equal Treatment Act (AGG). The court found a “less favorable treatment” on grounds of sex and sexual identity within the meaning of sections 3(1) and 19 AGG: the bank processed surname changes after marriage on the basis of a simple form and a marriage certificate, yet imposed additional, shifting hurdles for the plaintiff’s TSG-based first-name and gender entry change, kept addressing her with the wrong salutation for months, and temporarily impeded access to her securities account.

Comparators and equal treatment under the AGG

Central to the decision is the comparator analysis required by the AGG. The court compared the treatment of customers changing their names after marriage — where the bank offers a standard form and accepts a marriage certificate as proof — to the plaintiff’s situation, where the bank repeatedly requested further proofs despite receiving the court order under the former Transsexuals Act (TSG). Even after the plaintiff submitted the bank’s own name-change form, the bank requested it again and, only much later, demanded a new identification with an updated ID document. Meanwhile, credit card statements and correspondence continued under the male salutation for months, and a securities transfer stalled, leaving the plaintiff locked out of her depot for two weeks. The court concluded that these were unjustified additional obstacles, amounting to direct discrimination.

AML obligations do not excuse unequal treatment

The bank argued that anti-money laundering (AML) duties under the German Money Laundering Act (GwG) required a fresh identification when a customer changes first name and gender marker. The court rejected this as a general justification. While sections 10(1) no. 5 and 10(3a) GwG oblige banks to monitor relationships and update “material circumstances,” the court emphasized consistency: if a marital surname change is not treated as a “material change” triggering a new KYC, a TSG-based first-name change cannot categorically be treated as one either. The suggestion that a TSG name change typically coincides with a major change in appearance did not persuade the court. The judgment signals that AML controls must be risk-based, proportionate, and applied without discriminatory effect; operational AML processes cannot be used to impose higher hurdles on protected groups.

Damages and process conduct

Under section 21(2) AGG, the court awarded €2,000 — less than the €3,000 claimed — crediting the bank’s interim telephone apology, but emphasizing aggravating factors. These included sustained misgendering in communications months after the request and after receiving the form, the public exposure risk via cards and statements showing the wrong name, and the tone of the bank’s litigation submissions, which repeatedly used the term “Geschlechtsumwandlung”, reflecting a lack of sensitivity.

Bastian Schwind-Wagner_Follow "Courts are making clear that AML controls cannot be used to justify higher hurdles for trans customers. Consistent, risk-based KYC and respectful, timely data changes are not just good practice — they are legal obligations under the AGG."

Compliance takeaways for financial institutions

• Align KYC update triggers across scenarios.

  Define “material changes” consistently. If a marital name change does not trigger re-identification, a legally documented first-name change should not automatically do so. Any divergence must be supported by a concrete, documented risk rationale.

• Separate identity from nomenclature.

  When authoritative documentation (court order, registry extract, or updated ID) confirms continuity of personhood, name and salutation updates should be processed without undue delay or additional bespoke proofs.

• Build inclusive customer data workflows.

  Ensure front- and back-office systems can promptly update names, salutations, and payment card embossing. Automate propagation across statements, cards, and online banking to avoid prolonged mislabeling.

• Document AML risk assessments.

  If a new identification is required, record the specific risk drivers (e.g., discrepancies, suspected impersonation), not the customer’s trans status. Train staff to avoid protected-characteristic reasoning.

• Communications hygiene is a compliance risk.

  Misgendering and insensitive language can increase liability and damages. Adopt approved terminology, standardize templates, and monitor outbound communications during change processes.

Outlook under the Self-Determination Act (SBGG)

The bank stated it is aligning processes with the new Self-Determination Act (SBGG), which grants a right to have documents reissued or corrected after a change of gender entry, including payment cards (section 10(2) no. 6 SBGG), subject to a “legitimate interest” showing. While SBGG clarifies rights vis-à-vis both public and private entities, tension points remain where AML obligations intersect with personality rights. This ruling signals that general references to GwG will not override AGG protections. Going forward, firms should codify a path that respects SBGG/AGG rights while meeting GwG duties through narrowly tailored, risk-based controls, uniform comparators, and strong documentation.

Dive deeper

• LTO ¦ DKB muss trans Kundin Entschädigung zahlen ¦ Link