Germany Takes a Step Forward in Sanctions Enforcement: New Office to Combat Financial Crime Established
In a bid to strengthen its sanctions enforcement capabilities, Germany has created a new office, the Federal Office to Combat Financial Crime (BBF), which will be operational from 2025. The BBF is expected to enhance coordination between anti-money laundering and financial sanctions investigations.
Background on Sanctions Enforcement in Germany
Germany has struggled with enforcing EU sanctions effectively due to a lack of investigation and enforcement powers among national authorities. To address this deficiency, the Sanctions Enforcement Act (Sanktionsdurchsetzungsgesetz) was enacted in December 2022, which sets out the competencies of the Central Office for Sanctions Enforcement (ZfS).
The ZfS: Limited Powers and a Significant Step Forward
Although the ZfS has limited powers concerning targeted financial sanctions, including prohibiting funds and economic resources from being made available to sanctioned individuals and freezing their assets, its creation marks a significant step forward in Germany’s efforts to strengthen sanctions enforcement.
Key Responsibilities of the BBF
The Federal Office to Combat Financial Crime (BBF) will be responsible for:
- Combating financial crime through anti-money laundering measures
- Enforcing EU financial sanctions, including issuing licenses and releasing frozen funds
- Investigating and preventing sanctions violations
- Maintaining a register of frozen assets
The integration of the ZfS into the BBF is expected to create synergy effects between sanctions enforcement and anti-money laundering measures. This will enable a more coordinated approach to combating financial crime and improving the efficiency of EU sanctions.
Obligation to Notify Assets
As part of its efforts to prevent circumvention of EU sanctions, Germany has introduced an obligation for Economic Units Designated by the EU (EUDPs) to disclose their assets, including funds and economic resources subject to German jurisdiction. This reporting obligation is intended to counteract the risk of asset concealment.
Conclusion
The establishment of the BBF and its integration with the ZfS marks a significant development in Germany’s sanctions enforcement capabilities. As the country continues to strengthen its efforts to combat financial crime and enforce EU sanctions effectively, it is likely that other European countries will follow suit.