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Germany has jumped ahead of the EU with a new set of policies to deal with money laundering, as its finance ministry says it will be making a paradigm shift to “follow the money”.
“Germany must no longer have the reputation of a money laundering paradise. We have the courage to make a big splash,” said Christian Lindner, the country’s finance minister.
Lindner, who sits with the centrist Free Democratic Party, said that with efficient and effective structures, the EU’s largest economy will ensure that honest merchants are protected from those who do not follow the rules.
As part of the so-called paradigm shift the country wants to see, the government has said it wants three “central competencies” under one roof.
This includes a Federal Financial Criminal Police Office (BFKA), a country-wide investigative authority with its own human resources and state-of-the-art IT that will focus on complex financial crime and the enforcement of sanctions.
The country’s Financial Intelligence Unit (FIU) will also be responsible for working closely with this authority.
Alongside this, the German government has said there needs to be a body that coordinates supervision in the non-financial sector, such as in the real-estate sector, gambling and goods trading.
“We currently have over 320 state supervisory authorities nationwide with around 280 full-time employees. So we have more authorities in supervision than people who carry out this task full-time. That can't work,” said the German government, acknowledging the lack of coordination between the authorities that was called out by the Financial Action Task Force (FATF) this week.
The international standards-setting body criticised Germany, stating that in spite of a spate of reforms, it is still not doing enough to tackle money laundering.
“We have to reduce the number of supervisory authorities, at the same time work towards adequate staffing and, above all, become more efficient,” Germany’s government has said, mandating the Central Office for Money Laundering Control with the task of developing uniform standards and best practices and coordinating supervision among different states in the DACH region country.
Going forward, the ministry said that it will be launching a recruitment drive that will focus on recruiting from the public and private sectors, and will also focus on training staff.
The annual money laundering volume in Germany is around €100bn a year, which the German government says is around one-fifth of the entire federal budget for 2022.
Of this €100bn estimated money laundering volume, far less than 1 percent is identified and confiscated by way of criminal prosecution, it said.
