Financial Crime World

Germany Takes Bold Step to Combat Financial Crime with Sweeping Package of Reforms

In a major bid to overhaul its approach to tackling financial crime, Germany’s Federal Cabinet has adopted a package of laws aimed at fundamentally reshaping the country’s structures and powers for fighting money laundering and other financial crimes. The reforms are designed to reposition institutions, improve methods and tools, and strengthen the fight against criminals who exploit Germany’s financial system.

“Follow the Money” Approach

At the heart of the reforms is a “follow the money” approach, which will employ cutting-edge digital technology and data analysis to target sanctioned individuals and criminal organizations. This will involve combining three key pillars:

  • Analysis: Advanced data analytics will be used to identify suspicious transactions and patterns.
  • Investigation: A specialized team will investigate complex cases of international money laundering.
  • Oversight: Stronger oversight mechanisms will ensure that German authorities are better equipped to prosecute financial crimes.

Enhancing Investigative Capabilities

A major innovation is the establishment of a money laundering investigation hub within the Federal Office for Fighting Financial Crime (BBF), which will enable more effective prosecution of significant cases linked to Germany. Additionally:

  • The Central Office for Financial Transaction Investigations (FIU) and the Central Office for Sanctions Enforcement (ZfS) will be relocated to the BBF in mid-2025.
  • A new register of real estate transactions will provide authorities with digital access to up-to-date data on property deals when investigating money laundering and enforcing sanctions.

Strengthening Oversight and Coordination

The reforms also include the creation of a Central Office for Money Laundering Oversight, which will develop uniform guidelines for supervisory authorities across the non-financial sector. This will ensure a coordinated approach to combating financial crime and money laundering.

Implementing Recommendations and Priorities

The reforms are aimed at improving Germany’s ability to combat financial crime and implementing recommendations from the Financial Action Task Force (FATF) assessment. They also deliver on key priorities outlined in the coalition agreement and will help strengthen Germany’s reputation as a stable and secure financial hub.

Administrative Asset Investigations

In addition, the Federal Government has announced plans to introduce administrative asset investigations, which will enable authorities to:

  • Identify the economic beneficiaries of suspect assets
  • Trace the origins of assets
  • Order the deprivation of property if the owner or beneficiary cannot be identified (if necessary)

These reforms are a significant step forward in Germany’s efforts to tackle financial crime and money laundering, and are expected to have far-reaching implications for the country’s financial sector.