Germany Steps Up Efforts to Combat Terrorist Financing through Financial Institutions

A Growing Concern: Money Laundering and Terrorist Financing in Germany

As one of the world’s largest economies and the EU’s biggest player, Germany is vulnerable to significant money laundering and terrorist financing risks due to its extensive global connections. Despite efforts to combat these threats, experts warn that more needs to be done to ensure resourcing and prioritization at the operational level.

Progress Made in Asset Confiscation

Germany has made notable progress in asset confiscation with the introduction of non-conviction-based laws resulting in substantial seizures of criminal proceeds. This shift towards an administrative Financial Intelligence Unit (FIU) model in 2017 has been hailed as a positive step towards enhancing financial intelligence collection and use.

Challenges Remain in Supervision and Coordination

While Germany’s authorities have demonstrated a good understanding of the risks, domestic coordination across Germany’s 16 states remains a challenge. Consistency among supervisory and law enforcement authority is essential to effectively tackle illicit financial flows.

A Strong Track Record in Disrupting Terrorist Financing

Germany has a strong track record of investigating, prosecuting, and disrupting financing activity through a holistic approach to combating terrorism. However, authorities could be more proactive in using targeted financial sanctions as a preventive measure to freeze terrorist assets.

Regulatory Framework and Resourcing Concerns

While Germany’s regulatory framework for the financial and non-financial sectors is robust and comprehensive, there are concerns about resourcing over 300 supervisors and ensuring a consistent risk-based approach. The introduction of a Transparency Register has been positive but requires adequate resourcing ahead of its full transition in 2022.

Call to Action: Implementing Reforms and Allocating Resources

Experts stress that Germany must continue to implement reforms and allocate sufficient resources to combat money laundering and terrorist financing effectively. By doing so, the country can ensure a safer and more secure financial system for all stakeholders.