Countries/Jurisdictions of Primary Concern - Germany
While not an offshore financial center, Germany is one of the largest financial centers in Europe. Germany is a member of the Eurozone, thus making it attractive to organized criminals and tax evaders. Many indicators suggest Germany is susceptible to money laundering and terrorist financing because of its large economy, advanced financial institutions, and strong international linkages. Although not a major drug producing country, Germany continues to be a consumer and a major transit hub for narcotics. Germany allows the use of shell companies, trusts, holdings, and foundations that can help obscure the source of assets and cash.
Terrorists have carried out terrorist acts in Germany and in other nations after being based in Germany. Germany is estimated to have a large informal financial sector. Informal value transfer systems, such as hawala, are reportedly used by immigrant populations accustomed to such systems in their home countries and among refugees paying for their travel to Europe/Germany. There is little official data on the scale of this activity.
Trends in money laundering include a decrease in cases involving financial agents, i.e., persons who are solicited to make their private accounts available for money laundering transactions. Digital and cybercrime continue to challenge law enforcement. There are increasing cases of tax evasion, transnational collusive agreements and manipulations, and corruption and money laundering involving global financial institutions and corporations. Bulk cash smuggling by organized crime elements is prevalent in Germany, especially illicit drug proceeds arriving in Germany from the Netherlands. The use of cash transactions is high. Free zones exist in Bremerhaven, Cuxhaven, and Hamburg. Unfenced inland ports are located in Deggendorf and Duisburg.
For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found at: //2009-2017.state.gov/j/ct/rls/crt/
Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or illegal drug sales that otherwise significantly affect the U.S.: NO
criminalizATION OF money laundering:
“All serious crimes” approach or “list” approach to predicate crimes: Combination
Are legal persons covered: criminally: NO civilly: YES
Know-your-customer (KYC) rules:
Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: NO
KYC covered entities: Banks, financial services, payment, and e-money institutions and their agents; financial enterprises; insurance companies and intermediaries; investment companies; lawyers, legal advisers, auditors, chartered accountants, tax advisers, and tax agents; trust and company service providers; real estate agents; casinos; and persons trading in goods
Number of STRs received and time frame: 24,054 in 2014
Number of CTRs received and time frame: Not applicable
STR covered entities: Banks, financial services, payment, and e-money institutions and their agents; financial enterprises; insurance companies and intermediaries; investment companies; lawyers, legal advisers, auditors, chartered accountants, tax advisers, and tax agents; trust and company service providers; real estate agents; casinos; and persons trading in goods
money laundering criminal Prosecutions/convictions:
Prosecutions: 992 in 2013
Convictions: 882 in 2013
Records exchange mechanism:
With U.S.: MLAT: YES Other mechanism: YES
With other governments/jurisdictions: YES
Germany is a member of the FATF. Its most recent mutual evaluation can be found at: http://www.fatf-gafi.org/countries/d-i/germany/documents/mutualevaluationofgermany.html
Enforcement and implementation issues and comments:
On June 20, 2015, amendments to the German Criminal Code entered into force to implement UNSCR 2178. The changes supplement prior legislation from 2009 outlawing certain “preparatory terrorist actions” such as attending training camps abroad, categorizing travel and attempted travel as such preparatory actions. They specifically criminalize all forms of terrorism finance, including financing of terrorist travel.
Tipping off is a criminal offense only if it is committed with the intent to support money laundering or obstruct justice, and applies only to previously-filed suspicious transaction reports (STRs). Otherwise, it is an administrative offense that carries a fine of up to €100,000 (approximately $109,500) under the AML Act. Legal persons are only covered by the Administrative Offenses Act and are not criminally liable under the criminal code. While Germany has no automatic currency transaction report (CTR) requirement, large currency transactions frequently trigger STRs.
Germany has no federal statistics on the amount of assets forfeited in criminal money laundering cases. Assets can be forfeited as part of a criminal trial or through administrative procedures such as claiming back taxes. In practice, asset forfeiture is limited in utility as the state holds the burden of proof to prove a tie to a specific and credible illegal act. Germany has time restrictions on how long it can restrain forfeitable assets for foreign proceedings. Such assets generally may be held for one year, but extensions are possible.
In 2015, German bank Commerzbank agreed to pay a $1.45 billion fine for failing to comply with U.S. sanctions laws and AML regulations. According to the investigation, between April 2006 - January 2010 Commerzbank employees purposely tried to mislead regulators about the identity of Iranian and Sudanese entities related to more than $253 billion in dollar clearing transactions. In addition, bank employees sought to alter the bank’s transaction monitoring system so it would create fewer ‘red flag’ alerts about potential misconduct.
The government should consider strengthening the provisions on tipping off and the regulations on domestic politically exposed persons (PEPs).