Anti-Money Laundering and Counter-Terrorism Financing in Germany: A Report Summary

Germany’s Financial Sector

Germany has a significant presence in the European Union’s financial sector, with:

• The highest number of credit institutions and foreign branches in the EU
• 6 high-risk major banks and co-operatives subject to over 20 sanctions by BaFin in 2019-2020
• Large German commercial banks offering various financial services with a substantial presence abroad

Money Laundering/Terrorist Financing Risks

Germany faces several money laundering/terrorist financing risks, including:

• Main ML/TF risks arising from its well-performing economy, cash-intensive nature, and international interconnectedness
• International ML/TF risks, including those from foreign predicates, posing a significant concern
• Cash-based ML/TF, laundering through the real estate sector, misuse of legal persons/arrangements, emerging risks (including virtual assets), and sources of funds for terrorism financing also pose risks

Effectiveness of Anti-Money Laundering Measures

Germany has made significant progress in technical compliance with the FATF Standards. However:

• Many changes have occurred in the three to five years before the on-site visit or less, requiring further evaluation
• Some reforms are too recent or require more time to be operational

Key Areas of Improvement

To enhance anti-money laundering effectiveness in Germany, focus should be placed on:

• Improving DNFBP (Designated Non-Financial Businesses and Professions) supervision
• Enhancing coordination with and across Länder
• Changes to the ML law and introduction of the Transparency Register

Conclusion

The report highlights Germany’s strong technical compliance with anti-money laundering standards but notes areas where effectiveness could be improved. Addressing these key areas will help strengthen Germany’s efforts in preventing money laundering and counter-terrorism financing.