Money laundering: why the anti-money laundering agency works so badly – economy

The alerts came early, they were as clear as they were many, but the weak points in the fight against money laundering in Germany remained. Since spring 2019, representatives of the 16 Länder have expressed their concern in letters and discussions regarding the poor work of the special customs unit CRF. This authority was called the Financial Intelligence Unit, which until recently was known only to connoisseurs. Shortly before the federal election, this authority suddenly and violently hit the headlines after prosecutors from Osnabrück presented themselves to the Federal Ministry of Finance and Justice with search warrants. The FIU, which reports to the ministry headed by the candidate for the chancellery of the SPD, Olaf Scholz, is said to have transmitted too late or not at all to the authorities in charge of the investigation indications of alleged financing of terrorism. The hitherto unknown officials are suspected of having prevented the sanctions in office. Money laundering as an electoral problem.

With the Osnabrück criminal proceedings, the dispute over grievances at the FIU intensified: a dispute that began with the establishment of the authority in the summer of 2017. It is documented in numerous parliamentary inquiries from opposition from the Bundestag, through fierce criticism of the state judicial police offices, in letters from the ministries concerned. Largely unnoticed by the public, the federal and state governments have discussed failures in the fight against money laundering for years – but they cannot find a solution. According to SZ research, the ministries of justice in the Länder have long been at the end of their tether. At a conference of state justice ministries in the fall of 2020, a state official reportedly scolded loudly that the “limit of the bearable” had been reached in the meantime.

He referred to the still insufficient cooperation between the FIU and the investigative authorities of the Länder. At the same time, the FIU is still unable to deal with the mass of reports of suspected money laundering. Banks and other parties compelled to do so reported questionable money transfers more than 144,000 times last year. Many cases then found themselves stranded with the CRF. If investigators learn too late of a concrete suspicion, money is lost in many cases – much to the delight of those in this country who turn billions of dirty money from criminal transactions such as fraud or related offenses. to drugs in so-called own active ingredients. “The FIU has submitted and often is submitted very old reports of suspected money laundering to law enforcement authorities,” explains the Bavarian Ministry of Justice. This relates to processes that existed up to two years ago.

Anti-money laundering authorities violate money laundering law

Germany is under pressure on this issue. The highest international body against money laundering, the Financial Action Task Force (FATF), is currently reviewing the quality of the fight against money laundering in this country, and the work of the FIU is also being reviewed. . The experts count again on a bad note, the result of the control of the previous test in 2010 was catastrophic. For decades, Germany has been a haven for criminal gangs who invest their illegally generated assets in real estate and businesses. In 2020, the Federal Audit Office considered that the FIU “could only respond insufficiently to the expectations placed in it”.

Since the beginning of 2020, the FIU has been trying to bring the situation under control in consultation with the Federal Ministry of Finance with what is known as the “risk-based approach”. According to this, officials sort money laundering reports according to risk areas previously defined using software. Anything that does not clearly correspond to these priorities – such as the categories of terrorist financing or organized crime – remains in the authority’s database. In its current annual report, the FIU speaks of a “prioritization of incoming suspicious transaction reports”; only what can be attributed to the main risk areas is analyzed in depth. This summer, the Federal Ministry of Finance even included the risk-based approach in the law on money laundering – against the advice of the Länder.

Because the procedure is illegal in their eyes. In other words: the Federal Anti-Money Laundering Authority itself is breaking the law on money laundering. The Lower Saxony Ministry of Justice assumes “that suspicious reports which cannot be attributed to any of the internal risk areas of the FIU will not be transmitted, regardless of their criminal content”. The FIU would be obligated to do just that: it should not investigate, but rather convey any possible suspicion to law enforcement authorities as soon as possible. The North Rhine-Westphalia Ministry of Justice criticizes the fact that “a limited analysis based on risk areas prevents the FIU from obtaining valid and complete information”.

Doubts about the claims of Finance Minister Scholz

Criminal lawyers at the Federal Ministry of Justice, headed by Christine Lambrecht (SPD), apparently see it that way. According to a letter from the ministry from May 2020, the approach of the FIU is “from a local point of view” incompatible with the requirements of Article 32 (2) of the law on money laundering must transmit “immediately “.

While Finance Minister Scholz says, as last Monday, that “more progress has been made in the last three years than in the last 30 years” in the fight against money laundering in Germany, the reality is different. And it obviously takes a lot of meetings, letters and calls to sort things out. An envoy from the Federal Ministry of Justice, in turn, promised the Länder in May 2019 that they would contact the Ministry of Finance on their requests. Christine Lambrecht’s reply to her colleague from the Scholz Party should in fact be short. But a year passed before the alarming letter from the Justice Department to the Treasury Department.

Thus, bureaucratic processes also seem to prevent an effective fight against money laundering. After further, sometimes outraged letters from federal state justice departments, something really seems to be happening. The insufficient exchange of information between the FIU and the investigative authorities of the Länder should now be improved by a total of ten “liaison officers” in the judicial police offices of the states. The CRF has also been providing a data interface since September. Meanwhile, the federal ministries of finance, justice and the interior are taking a closer look at the backlog of messages. As of September 2019, 48,229 reports of suspected money laundering had accumulated, said left-wing Bundestag MP Fabio De Masi, citing figures from the Ministry of Finance.

Two months ago, the Ministry of Justice finally informed the Länder that they were sitting together: between the federal ministries of justice, finance and the interior, a “full manual assessment” of all suspicious transaction reports received within a limited period of time (eg one month) was considered. With such a test, officials want to know what facts are involved and in particular to what extent references to other criminal offenses “have not been recognized and therefore not passed on to law enforcement” in the automated analysis.

Will money laundering suspicion reports be manually re-checked soon?

Instead of relying solely on software, people would review every suspicious transaction report and, if in doubt, pass it on. Time is often short: Banks hold suspicious transactions for up to three days when they report suspicions of money laundering. Then the money flows – if no investigative authority has intervened by then.

The test now planned by federal departments after years of criticism seems to be a belated admission that the automatic assessment of suspicious transaction reports ultimately does not work. And this shows the big gap between the self-image of the FIU and the expectations of the investigating authorities. The FIU wishes to analyze reports and classify them according to urgency, but can and should not assess them under criminal law. Police and judicial authorities fear that they will not be aware of a specific suspicion or that they will be informed too late. This is illustrated by the procedure in Osnabrück, which has now led to the searches in Berlin: after the FIU failed to pass information on terrorist financing to prosecutors, the banks reported directly to the prosecution. It came far too late for suspicious transactions over 1.7 million euros in 2018 – and the question now is why customs officials failed to forward these reports.

Constant criticism from the Länder as well as from the left, the FDP and the Greens in the Bundestag has made the FIU now work faster. The Bavarian Ministry of Justice speaks of an “improvement”. Urgent cases that are due are “usually now submitted on time”. So in time for the police and prosecutors to intervene before it’s too late and the money is gone. Nevertheless, according to the Bavarian Ministry of Justice, there are still “waves of old processes”. One gets the impression that the FIU deals on several occasions with old cases which have not been dealt with for a long time or which have only been dealt with in a subordinate manner. This was also evident at Wirecard when, after the scandalous group went bankrupt in June 2020, the FIU suddenly presented old reports of suspicious serial transactions that had remained in place until then.

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