Financial Crime World

Germany’s Financial Regulatory Bodies Strengthen Anti-Money Laundering Measures Amid Rising Risks

In recent years, Germany has made significant strides in enhancing its anti-money laundering and combating of terrorist financing (AML/CFT) regime. However, more needs to be done to ensure effective implementation at the operational level.

Challenges Facing German Authorities

Despite having a good understanding of the AML/CFT risks faced by Germany, authorities face challenges in coordinating efforts across the country’s 16 states, as well as between supervisory and law enforcement agencies. The use of cash remains widespread, and informal money transfer services pose significant risks that require priority attention.

Strengths of Germany’s AML/CFT Framework

Germany’s asset confiscation regime is a strong feature of its AML/CFT framework, with the introduction of non-conviction based laws resulting in the seizure of substantial criminal proceeds. The country also has a good track record of investigating, prosecuting, and disrupting financing activity as part of a comprehensive approach to combating terrorism.

Challenges and Opportunities for Improvement

  • The transition to an administrative Financial Intelligence Unit (FIU) model in 2017 has been challenging, and Germany must continue to prioritize implementation at the operational level.
  • More needs to be done to enhance the collection, analysis, dissemination, and use of financial intelligence by Germany’s FIU.
  • Authorities must also be more proactive in investigating and prosecuting money laundering activity consistent with Germany’s risk profile.
  • Germany could do more to proactively freeze terrorist assets using its targeted financial sanctions regime.

Ongoing Challenges and Reform Efforts

Germany’s AML/CFT regime faces ongoing challenges, including:

  • Adequate resourcing for over 300 supervisors
  • Ensuring a consistent risk-based approach
  • Transitioning the Transparency Register to a full register in 2022

Conclusion

While Germany’s regulatory framework is robust and comprehensive, it requires continued reform efforts and prioritization to ensure effective implementation at the operational level. With ongoing challenges and opportunities for improvement, Germany can strengthen its defenses against money laundering and terrorist financing.