Germany has been criticised by a global watchdog for failing to do enough to tackle money laundering. The country is being taken to task as it prosecutes very few for the crime despite being one of the globe’s biggest cash centres.
The report by the Financial Action Task Force (FATF), a global body that groups countries from the United States to China to tackle financial crime, is a blow to the standing of Germany, which prides itself on a reputation for probity.
The report highlights many failings, including lack of control of those who handle large sums of cash such as estate agents. The report further states that while Germany understood the risks, it was not doing enough to tackle them.
The FATF criticised, for instance, the disjointed nature of supervision, as Germany has more than 300 regional authorities responsible for monitoring such players, as well as a big shortage of personnel.
Germany has enhanced its systems to tackle money laundering and terrorist financing, particularly regarding asset recovery. However, it must make major improvements including in the use of financial intelligence and risk-based supervision.
See more➡️https://t.co/QgcYsErC0j 1/6 pic.twitter.com/KTaoHU3F61— FATF (@FATFNews) August 25, 2022
Germany’s score lags far behind France, which the FATF also recently assessed. The poor ranking means Germany will now have to report annually to the body in the coming years about its progress in tackling shortcomings, according to Reuters.
Germany’s finance minister, Christian Lindner, acknowledged the problem. He pledged to centralise control, hire additional staff and modernise the authorities’ technology. “We deal with the small fish, while the big fish get away,” he told journalists earlier this week before the report’s publication, adding that he would step up efforts to “follow the money”.
According to FATF, Germany prosecuted about 1,000 people for money laundering in 2020, despite opening more than 37,000 inquiries. This level of convictions is considered “very small”.
The FATF also flagged money laundering risks from hawala payments. This means ‘transfer’ in Arabic. The system is widely used in the Middle East, moving money through a trusted network of agents who operate outside banks.
The FATF urged Germany to take “additional measures … to more effectively mitigate the risks in relation to cash and hawala services”.
