The Federal Republic is weakening in the fight against money laundering. The main reason for this is said to be a wrong political prioritization. Finance Minister Lindner wants to counteract the problem with a new authority. But there is much more to a paradigm shift, critics warn.
An international report confirms that Germany still has significant deficits in combating money laundering, even if progress has been made in some areas. The Financial Action Task Force (FATF) based in Paris places the Federal Republic in the middle internationally. A major point of criticism is that the fight against money laundering in Germany has not yet had sufficient political priority.
According to the report, Germany has “achieved significant improvements” over the past five years. This applies to real estate transactions, for example. However, some of the reforms are still not effective. “Additional measures are needed to mitigate the threats related to cash transactions and hawala (informal payment systems mostly based on cash),” the FATF warned. The different responsibilities in the federal and state governments continue to be a “challenge”, it said.
However, the strengthening of the Financial Intelligence Unit (FIU), which is based at customs and thus indirectly at the Federal Ministry of Finance, is rated positively. The clear commitments of the federal government to combating money laundering are also praised. However, “it is not always clear that this is also being implemented at the operational level”. The number of cases picked up is smaller than expected. There are also deficits in the necessary exchange of information between German authorities. This also hinders international cooperation.
Federal Finance Minister Christian Lindner announced on Wednesday that a new, central authority would be set up to combat money laundering in Germany. This includes setting up a “Federal Financial Criminal Police Office”. Lindner spoke of a “big hit”, but did not name a specific timetable. Obviously, the details still need to be discussed.
“Germany has a major money laundering problem. Even if the FATF primarily identifies individual improvements in the fight against money laundering, the in-depth analysis still shows significant deficits,” explained Stephan Ohme, the money laundering expert at Transparency International. “Dirty money from organized crime and autocrats worldwide finds a safe haven in Germany,” he accused those responsible.
Ten years after previous sharp criticism from the FATF, “Germany is again being criticized for its poor fight against money laundering,” explained Konrad Duffy from the organization Finanzwende. Germany is still too weak, especially in the more complex and larger cases. “There is more to a real paradigm shift in combating money laundering than creating a new authority,” warned Duffy, referring to Lindner’s plans.
The Federal Financial Supervisory Authority (Bafin), which is also the subject of the FATF report, welcomed the attested improvements in risk understanding. The recommendations regarding improvements in preventive supervision in the non-bank financial sector and the elimination of deficiencies in some, especially larger banks should be implemented, assured Bafin Executive Director Birgit Rodolphe.