Financial Crime World

Germany’s Anti-Money Laundering Efforts Show Promise, But More Work Needed

Despite significant reforms over the past five years, Germany still faces challenges in its fight against money laundering and terrorist financing. As the world’s fourth-largest economy and largest in the EU, the country is vulnerable to illicit financial flows due to its high number of global connections.

Domestic Coordination Remains a Challenge

German authorities have made progress in understanding the risks associated with these crimes, but domestic coordination across the country’s 16 states remains a challenge. The lack of consistency between supervisory and law enforcement agencies also needs to be addressed.

Areas of Progress

  • Asset confiscation: Germany has excelled in this area, introducing non-conviction based laws that have resulted in the seizure of significant criminal proceeds.
  • Targeted financial sanctions regime: Germany has a good track record of disrupting funding for terrorism through its targeted financial sanctions regime.

Challenges Ahead

  • Transition to an administrative Financial Intelligence Unit (FIU) model: While this was a positive step, it has been difficult and requires further prioritization at the operational level.
  • Collection, analysis, dissemination, and use of financial intelligence: Authorities need to be more proactive in investigating and prosecuting money laundering activity.

Comprehensive Framework in Place

A comprehensive framework is in place for regulating and supervising the financial and non-financial sectors for anti-money laundering and combating the financing of terrorism (AML/CFT) purposes. However, more priority needs to be given to resourcing the over 300 supervisors and ensuring a consistent risk-based approach is taken.

Upcoming Developments

  • Transparency Register: The introduction of this register has been a positive development, but it must be adequately resourced when it transitions to a full register in 2022.

Conclusion

Germany’s anti-money laundering efforts show promise, but more work is needed to ensure that illicit financial flows are effectively combated and the country remains a safe haven for legitimate financial activity. It is essential that Germany prioritizes addressing its remaining challenges and continues to make progress in this critical area.