Financial Crime World

Germany’s War on Financial Crime: New Laws Aim to Strengthen Fight Against Money Laundering and Terrorism Financing

Introduction

In an effort to combat the growing threat of financial crime, Germany’s Federal Cabinet has adopted a comprehensive package of laws aimed at revamping the country’s structures and powers for fighting money laundering and terrorism financing. This new approach is designed to enhance the effectiveness of financial investigations, improve coordination among authorities, and bolster Germany’s reputation as a global leader in the fight against financial criminality.

A “Follow the Money” Approach

At the heart of the reforms is a “follow the money” approach, which will utilize cutting-edge data analysis and digital technology to track down criminals and sanctions violators. This plan combines three key pillars - analysis, investigation, and oversight - to create a more cohesive and effective system for fighting money laundering.

Key Reforms

  • Establishment of a Dedicated Money Laundering Investigation Hub: A dedicated money laundering investigation hub will be established within the Federal Office for Fighting Financial Crime (BBF), enabling authorities to prosecute more effectively significant cases of international money laundering linked to Germany.
  • Transfer of Authorities: The Central Office for Financial Transaction Investigations (FIU) and the Central Office for Sanctions Enforcement (ZfS) will be transferred to the BBF in mid-2025.
  • Creation of a Central Office for Money Laundering Oversight: A new office will be established to develop uniform guidelines for supervisory authorities across all non-financial sectors, ensuring a coordinated approach to combating financial crime and money laundering.
  • Establishment of a Register of Real Estate Transactions: A register of real estate transactions will be created, providing authorities with full digital access to up-to-date property data when fighting money laundering and enforcing sanctions.

Priorities and Recommendations

The reforms are designed to deliver on several key priorities outlined in the coalition agreement, while also implementing recommendations from the Financial Action Task Force’s assessment of Germany. The Federal Government has committed to delivering further measures aimed at strengthening its fight against financial crime, including a procedure for administrative asset investigations.

Administrative Asset Investigations

The plan to introduce administrative asset investigations is particularly significant, as it will enable authorities to identify the “economic beneficiaries” of suspect assets or trace the funds used to acquire them. In cases where the owner or beneficiary cannot be identified, authorities may also be empowered to order the deprivation of property, pending a court ruling.

Implications and Next Steps

These reforms mark a major shift in Germany’s approach to combating financial crime and money laundering, and are expected to have far-reaching implications for the country’s economic stability and international reputation. The Federal Government will continue to work towards strengthening its fight against financial crime, ensuring that Germany remains a leader in this area.