Germany has drawn criticism from the Financial Action Task Force (FATF) for not doing enough to tackle money laundering, such as not implementing reforms to its anti-money laundering and counter financing of terrorism (AML/CFT) regime and prosecuting very few for money laundering.
In its Mutual Evaluation Report Germany-2022, the FATF also says the world’s fourth largest economy is vulnerable to terrorist financing threats posed by hawala money value transfer services (MVTS).
Implementation and prosecutions
The FATF credits Germany for reforms taken to improve the collection and use of financial intelligence. But the country needs to prioritise the implementation of these reforms at the operational level and continue to enhance the collection, analysis, dissemination and use of financial intelligence, according to the global financial watchdog.
It says the German authorities also need to do more to proactively and systematically investigate and prosecute money laundering activity in line with Germany’s risk profile.
Terrorist financing risks
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 according to the FATF.
But Germany could be more proactive in using a targeted financial sanctions regime as a preventive measure to freeze terrorist assets. 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 the evaluation suggests.
Lacking resources
While there is a robust and comprehensive framework in place in Germany for regulating and supervising the financial and non-financial sector for compliance with AML/CFT, the FATF says more priority needs to be given to resourcing the over 300 supervisors and ensuring there is a consistent risk-based approach taken.
It also commends the introduction of a partial transparency register, but says priority needs to be given to ensuring it is adequately resourced when it transitions to a full register in 2022.
The FATF Mutual Evaluation Report Germany-2022 and an executive summary of the report can be downloaded from here.
Categories: Trade Based Financial crimes News
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