Anti-money laundering and counter-terrorist financing measures Germany
Mutual Evaluation Report
Germany has implemented significant reforms in the last five years to strengthen its system and more effectively combat money laundering and terrorist financing. Some of these new measures are already delivering results but Germany needs to continue to implement reforms and take steps to make sure that there is resourcing and prioritization at the operational level to combat illicit financial flows.
As the 4th largest economy in the world, the largest in the EU, and with a high number of global interconnections, Germany faces significant money laundering and terrorist financing risks. German authorities have a good understanding of these risks and provide constructive cooperation with counterparts in other countries. However, domestic coordination across Germany’s 16 states (Länder) is a challenge and coordination and consistency between the different supervisory and law enforcement authorities should be enhanced. Priority should also be given to mitigating the risks associated with the high use of cash in the country and the use of informal MVTS services.
Asset confiscation is a strong feature of Germany’s regime. The introduction of non-conviction based asset confiscation laws has resulted in the confiscation of significant amounts of criminal proceeds.
Germany’s transition in 2017 to an administrative FIU model has been a positive step towards improving the collection and use of financial intelligence. However, the transition has been challenging and Germany needs to continue to prioritize the implementation of these reforms at the operational level and continue to enhance the collection, analysis, dissemination and use of financial intelligence. Authorities also need to do more to proactively and systematically investigate and prosecute ML activity in line with Germany’s risk profile.
Germany faces significant terrorist financing risks and has a good track record of investigating, prosecuting and disrupting financing activity as part of a holistic approach to combating terrorism. However, Germany could be more proactive in using the targeted financial sanctions regime as a preventive measure to freeze terrorist assets.
While there is a robust and comprehensive framework in place for regulating and supervising the financial and non-financial sector for compliance with AML/CFT, more priority needs to be given to resourcing the over 300 supervisors and ensuring there is a consistent risk-based approach taken. The introduction of a Transparency Register has been positive but priority needs to be given to ensuring it is adequately resourced when it transitions to a full register in 2022.
Financial Action Task Force (FATF)