Financial Crime World

GERMANY’S FIGHT AGAINST FINANCIAL CRIME: PROGRESS AND CHALLENGES AHEAD

Introduction

Berlin, August 25, 2022 - Germany has made significant strides in strengthening its anti-money laundering (AML) and counter-terrorism financing (CTF) framework over the last five years. However, despite these efforts, the country still faces substantial risks and challenges in effectively combating illicit financial flows.

Risks and Challenges

Domestic Coordination

Germany’s domestic coordination among its 16 states remains a major challenge. Enhancing the coordination and consistency between various supervisory and law enforcement agencies is essential to tackle this issue.

  • High use of cash: The high use of cash in the country must be prioritized.
  • Informal money transfer services (MVTS): Addressing the utilization of informal money transfer services is crucial.

Progress and Strengths

Asset Confiscation

Germany has shown strength in asset confiscation, with significant seizures of criminal proceeds following the introduction of non-conviction based asset confiscation laws.

  • Administrative Financial Intelligence Unit (FIU) model: The transition to an administrative FIU model in 2017 has been a positive step towards improving the collection and use of financial intelligence.

Challenges Ahead

Implementation of Reforms

To effectively combat money laundering, Germany must prioritize the implementation of these reforms at the operational level and enhance the collection, analysis, dissemination, and use of financial intelligence.

  • Investigating and prosecuting money laundering activity: Authorities must take a more proactive approach to investigating and prosecuting money laundering activity in line with the country’s risk profile.
  • Targeted financial sanctions regime: There is scope for improvement in utilizing the targeted financial sanctions regime as a preventive measure to freeze terrorist assets.

Regulatory Framework

Germany’s regulatory framework for AML/CTF is comprehensive and robust, but more emphasis must be placed on resourcing the over 300 supervisors and ensuring a consistent risk-based approach.

  • Transparency Register: The introduction of a Transparency Register has been a positive development, but priority should be given to ensuring it is adequately resourced as it transitions to a full register in 2022.

Conclusion

Germany’s continued commitment to strengthening its AML/CTF framework will be crucial in addressing the complex challenges posed by financial crime and ensuring that the country remains a leader in global finance.