Financial Crime World

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Germany’s Financial Institutions Make Progress on AML/CFT Standards

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Berlin - Germany’s financial institutions have made significant progress in implementing anti-money laundering (AML) and combating the financing of terrorism (CFT) standards, according to a recent report by the Financial Action Task Force (FATF). However, some areas still require improvement.

Progress on AML/CFT Compliance

The report assesses Germany’s compliance with the FATF Recommendations and finds that the country has implemented most of the required measures. Germany was rated “largely compliant” in several areas, including:

  • National cooperation and coordination
  • Money laundering offence
  • Confiscation and provisional measures
  • Terrorist financing offence
  • Targeted financial sanctions related to terrorism and terrorist financing
  • Correspondent banking
  • Wire transfers

Areas Requiring Improvement

However, Germany was found to be “partially compliant” in some areas, such as:

  • Financial institution secrecy laws
  • Customer due diligence
  • Internal controls and foreign branches and subsidiaries
  • Transparency and beneficial ownership of legal persons

These areas require further improvement to ensure that Germany’s financial institutions are fully compliant with AML/CFT standards.

Non-Compliance in Certain Areas

Germany was also found to be “non-compliant” in some areas, including:

  • Powers of supervisors
  • Regulation and supervision of DNFBPs (designated non-financial businesses and professions)
  • Mutual legal assistance: freezing and confiscation

In these areas, significant changes are needed to bring Germany into compliance with the FATF Recommendations.

Roadmap for Reform

The report highlights several strengths in Germany’s AML/CFT regime, including:

  • A robust financial sector
  • Effective national cooperation and coordination
  • A well-functioning supervisory framework

However, it also identifies some weaknesses, such as a lack of transparency and beneficial ownership information for legal persons, and insufficient powers for supervisors to effectively monitor and supervise financial institutions.

The FATF report provides a roadmap for Germany’s financial institutions to improve their AML/CFT compliance. The German government has committed to implementing the necessary reforms and strengthening its AML/CFT regime to ensure that it is fully compliant with international standards.

Conclusion

While Germany has made significant progress in implementing AML/CFT standards, there are still areas that require improvement. The FATF report provides a clear roadmap for reform and highlights the need for sustained effort to strengthen Germany’s AML/CFT regime.