Financial Crime World

Germany Takes Tough Stance on Financial Crime with New Enforcement Agency

In December 2022, Germany took a significant step towards strengthening its financial crime prevention strategies by establishing the Central Office for Sanctions Enforcement (ZfS). This new agency is dedicated to enforcing European Union (EU) sanctions and will be integrated into the Federal Office to Combat Financial Crime (BBF) in June 2025.

Responsibilities of the ZfS

The primary responsibility of the ZfS is to enforce targeted financial sanctions imposed on individuals and entities designated by the EU. This includes:

  • Prohibiting the provision of funds or economic resources to these individuals and entities
  • Freezing their assets subject to German jurisdiction

The agency will also investigate potential sanctions violations, but it does not have the power to prosecute alleged offenses.

Enforcement Powers

The ZfS’s enforcement powers are limited to specific preventive measures, such as:

  • Monitoring transactions
  • Investigating suspicious activities

It will work closely with other authorities, including:

  • The German Federal Bank
  • Customs authorities
  • BAFA (Federal Office for Economic Affairs)

to ensure a more coordinated approach to enforcing EU sanctions.

Key Features of the ZfS

One of the key features of the ZfS is its obligation to notify asset holders of their responsibilities under the new law. As of January 2024, entities designated by the EU as subject to sanctions will be required to disclose their assets in Germany to the ZfS.

Impact on Financial Crime Prevention

The creation of the ZfS marks a significant step forward in Germany’s efforts to combat financial crime and improve its sanctions enforcement regime. The agency’s limited but specific competencies will enable it to focus on targeted measures, such as:

  • Investigating suspicious transactions
  • Preventing sanctions violations

Federal Office to Combat Financial Crime (BBF)

In addition to the ZfS, Germany has also established the Federal Office to Combat Financial Crime (BBF), which will be operational in 2025. The BBF will oversee the country’s anti-money laundering efforts and ensure that financial institutions are adequately equipped to detect and prevent financial crimes.

Conclusion

Germany’s new sanctions enforcement agency is a significant development in the fight against financial crime, and it is expected to have a positive impact on the country’s ability to enforce EU sanctions effectively. As the ZfS begins its work, Germany has sent a strong signal that it takes sanctions enforcement seriously and is committed to improving its financial crime prevention strategies.