Cash-rich Germany slammed by money laundering watchdog


FRANKFURT, Aug 25 (Reuters) – Germany has been criticized by a global watchdog for not doing enough to tackle money laundering, including prosecuting very few people for the crime, despite is one of the largest treasury centers in the world.

The report by the Financial Action Task Force (FATF), a global body that brings together countries from the United States to China to fight financial crime, is a blow to the reputation of Germany, which prides itself on a reputation for probity.

The assessment highlights a range of failings, including a lack of control over those handling large sums of money, such as estate agents, adding that while Germany understood the risks, it had not done enough to deal.

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The FATF, for example, criticized the disjointed nature of supervision, with more than 300 regional authorities in charge of overseeing these actors, as well as a lack of personnel.

Germany’s score is far behind that of France, which the FATF also recently assessed. The poor ranking means that Germany will now have to report annually to the body for years to come on its progress in fixing the shortcomings.

German Finance Minister Christian Lindner has acknowledged the problem and pledged to centralize control, install additional staff and upgrade the authorities’ technology.

“We take care of the small fish, while the big fish run away,” he told reporters earlier this week before the report was released, adding that he would do more to “follow the money “.

The FATF said Germany prosecuted around 1,000 people for money laundering in 2020, despite opening more than 37,000 investigations, a level of convictions it considered “very low”.

Germany has more banks than any other country in the European Union, while many Germans prefer to use cash, which the FATF said accounted for three-quarters of transactions. There is no upper limit on the size of cash transactions.

The FATF has also flagged the money laundering risks associated with hawala payments, which means “transfer” in Arabic. The system is widely used in the Middle East, transferring payments through a trusted network of agents who operate outside of banks.

Germany has 11 million international migrants, the third largest in the world, according to the report.

The FATF urged Germany to take “additional measures … to more effectively mitigate the risks associated with cash and hawala services.”

Konrad Duffy of Finanzwende, a group which lobbies for financial transparency, said German authorities needed more powers to fight money laundering and that rules should be tightened to prevent the purchase of properties in species.

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Reporting by John O’Donnell; Editing by Frank Jack Daniel

Our standards: The Thomson Reuters Trust Principles.

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