Financial Crime Prevention Best Practices in Germany: Challenges Ahead for the Federal Office to Combat Financial Crime
Germany’s new Federal Office to Combat Financial Crime (BBF) is set to face numerous challenges when it opens its doors in January 2024. The creation of the BBF was announced last year as a vital weapon in the country’s fight against growing money-laundering and terrorist financing risks.
Challenges Ahead
The BBF will have three main pillars: the Central Office for Sanctions Enforcement, the Central Office for Financial Transaction Investigation, and the new Office for ML Investigation. However, Germany has been criticized for its lack of coordination in fighting financial crime due to its federal system, where states have significant control over prosecutions.
Cash-Based Economy Concerns
Germany’s cash-based economy is also a major concern, as it makes it attractive for money launderers. The Financial Action Task Force (FATF) has identified Germany as needing more proactive and systematic investigation and prosecution of financial crime, as well as a more consistent risk-based approach overall.
Reform Efforts
Germany’s Finance Minister Christian Lindner has pledged to create the Federal Office, train more experts, and accelerate digitization and interconnection of property registers and records. However, critics have argued that the reforms lack power to solve Germany’s complex anti-financial crime problems.
Funding and Expectations
The new Federal Office is expected to receive EUR 700 million in funding over four years to set up its operations. Despite the challenges ahead, the creation of the BBF could help increase resources for AML enforcement and criminal investigations, as well as solve some of the problems at Germany’s Financial Intelligence Unit (FIU).
Effective Anti-Money Laundering Solutions
For companies looking to improve their anti-money laundering efforts, a partner who can help create a risk-based approach is crucial. Moody’s Analytics offers a full suite of risk management and compliance solutions, including:
- Identity verification
- UBO discovery
- Screening for PEPs, sanctions, and adverse media
- Orbis database with information on over 425 million companies
By working with Moody’s Analytics, businesses can create a profile of risk for each individual or entity they work with and make decisions with confidence based on accurate data.
Conclusion
Germany’s new Federal Office to Combat Financial Crime will face significant challenges in the fight against money-laundering and terrorist financing. However, by implementing effective reforms and partnering with companies that offer AML solutions, such as Moody’s Analytics, Germany can make rapid progress in tackling its anti-financial crime problems.
The Way Forward
Germany’s cash-based economy and strong federal system are major concerns for financial crime prevention, but the country is taking steps to address these issues through the creation of the BBF. With the right partner and solutions, companies can also help prevent financial crime and stay ahead of the challenges posed by money laundering and terrorist financing.