Germany's measures to combat money laundering and terrorist financing

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English

Country

Mutual Evaluation Report Germany-2022

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Mutual-Evaluation-Report-Germany-2022.pdf
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Paris, 25 August 2022 - 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.

More information:  

The FATF Recommendations

FATF Methodology for assessing compliance with the FATF Recommendations and the effectiveness of AML/CFT systemsd FATF Methodology for assessing compliance with the FATF Recommendations and the effectiveness of AML/CFT systems

Ratings

Effectiveness

Ratings that reflect the extent to which a country's measures are effective. The assessment is conducted on the basis of 11 immediate outcomes, which represent key goals that an effective AML/CFT system should achieve.

Ratings that reflect the extent to which a country's measures are effective. The assessment is conducted on the basis of 11 immediate outcomes, which represent key goals that an effective AML/CFT system should achieve.

Germany - Mutual Evaluation 2022

IO1
SE
IO2
SE
IO3
ME
IO4
ME
IO5
ME
IO6
ME
IO7
ME
IO8
SE
IO9
SE
IO10
ME
IO11
ME

HE = high level of effectiveness   |   SE = substantial level of effectiveness    |   ME = moderate level of effectiveness   |   LE = low level of effectiveness

Technical Compliance

Ratings which reflect the extent to which a country has implemented the technical requirements of the FATF Recommendations.

Germany - Mutual Evaluation 2022

R.1 - Assessing risk & applying risk-based approach
LC
R.2 - National cooperation and coordination
LC
R.3 - Money laundering offence
C
R.4 - Confiscation and provisional measures
C
R.5 - Terrorist financing offence
LC
R.6 - Targeted financial sanctions related to terrorism & terrorist financing
PC
R.7 - Targeted financial sanctions related to proliferation
PC
R.8 - Non-profit organisations
LC
R.9 - Financial institution secrecy laws
C
R.10 - Customer due diligence
LC
R.11 - Record keeping
C
R.12 - Politically exposed persons
LC
R.13 - Correspondent banking
PC
R.14 - Money or value transfer services
LC
R.15 - New technologies
LC
R.16 - Wire transfers
C
R.17 - Reliance on third parties
LC
R.18 - Internal controls and foreign branches and subsidiaries
LC
R.19 - Higher-risk countries
C
R.20 - Reporting of suspicious transactions
C
R.21 - Tipping-off and confidentiality
C
R.22 - DNFBPs: Customer due diligence
LC
R.23 - DNFBPs: Other measures
C
R.24 - Transparency and beneficial ownership of legal persons
PC
R.25 - Transparency and beneficial ownership of legal arrangements
LC
R.26 - Regulation and supervision of financial institutions
LC
R.27 - Powers of supervisors
C
R.28 - Regulation and supervision of DNFBPs
LC
R.29 - Financial intelligence units
C
R.30 - Responsibilities of law enforcement and investigative authorities
C
R.31 - Powers of law enforcement and investigative authorities
C
R.32 - Cash couriers
C
R.33 - Statistics
PC
R.34 - Guidance and feedback
LC
R.35- Sanctions
LC
R.36 - International instruments
LC
R.37 - Mutual legal assistance
C
R.38 - Mutual legal assistance: freezing and confiscation
C
R.39 - Extradition
C
R.40 - Other forms of international cooperation
LC

C = compliant   |   LC = largely compliant     |   PC = partially compliant   |   NC = non-compliant