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11 October 2023

Stepping up the fight against financial crime

We need to take decisive action against financial crime, especially money laundering, and effectively enforce sanctions. To this end, we are implementing the “follow the money” approach with a new strategy. We are initiating fundamental reforms not only of structures and institutions but also of tools and approaches. In particular, this includes bundling key competencies in the new Federal Financial Crime Agency (FFCA; Bundesamt zur Bekämpfung von Finanzkriminalität).

We must ensure that financial crime has no future in Germany. Money laundering, illicit financial flows and the evasion of sanctions hurt everyone:

  • Money laundering erodes people’s trust in the rule of law, in meritocracy and in Germany’s strength as a magnet for business and finance.
  • Illicit financial flows distort competition and drive inflation, harming honest citizens and businesses.
  • If criminals are able to successfully introduce illicit proceeds into the legal economy, it creates an incentive for further criminal offences.

We need a new strategy to combat internationally organised financial crime more effectively, because the “big fish” are still slipping through the net.

We are initiating fundamental reforms with the Combating Financial Crimes Act (Finanzkriminalitätsbekämpfungsgesetz): the FFCA will bundle the most important competencies under one roof, implement the “follow the money” approach in its investigations, permanently prioritise the fight against money laundering, and utilise state-of-the-art digital technology. The new agency will be set up in 2024 and take up its work in 2025.

Key changes:

  • Bundling key competencies
    By combining analysis (Financial Intelligence Unit), criminal investigations and supervision within the FFCA, we will establish a holistic, linked-up anti-money laundering approach in Germany and overcome the fragmentation of currently existing structures. Core competencies will be bundled under one roof, which will facilitate and enhance cooperation. Findings, expertise and evidence can be shared and aggregated more quickly and efficiently. In the longer term, the aim is to integrate the Central Office for Sanctions Enforcement (Zentralstelle für Sanktionsdurchsetzung) into the FFCA alongside the FIU.

infographic: Federal Financial Crime Agency (FFCA) BildVergroessern
Source:  Federal Ministry of Finance

  • Using the “follow the money” approach in investigations
    At the core of the FFCA will be the new Money Laundering Investigative Centre (MIC; Ermittlungszentrum Geldwäsche). This is where the most significant cases of international money laundering with links to Germany will be investigated. The MIC will take a rigorous approach to detecting and tracking illicit financial flows. Unlike other law enforcement authorities, the MIC will not take predicate offences as a starting point for its investigations but will focus instead on suspicious financial flows to uncover the underlying crimes. This is also referred to as the “follow the money” approach.

    Germany has been criticised for its failure to adequately prosecute money laundering offences. The MIC will close this gap. Until now, most prosecutions have been for petty and small-scale money-laundering offences. With the “follow the money” approach, illicit or suspicious financial flows can be traced back to the professional “masterminds” and networks behind the crimes, so that the “big fish” also land in the net. In this way, we are taking anti-money laundering investigations to the next level.
  • Prioritising the fight against money laundering
    The clear focus of the FFCA will be on investigating complex cases of international money laundering. This will prevent anti-money laundering investigations taking a back seat to investigations into other crimes. With the FFCA, targeted capacities and specific competencies are being created for the first time to give permanent priority to significant cases of international money laundering with links to Germany. The aim is to ensure the long-term provision of adequate resources to prosecute these cases.
  • Using state-of-the-art technology to fight money laundering
    State-of-the-art digital technology will give FFCA employees the tools to carry out their investigative and supervisory work quickly and to a high standard. Given the complexity of money laundering activities, for example in the area of cryptocurrencies, and the large amounts of data involved, strong analytical capabilities are a key requirement for the FFCA. The focus here is also on the potential of data analytics and artificial intelligence.
  • Building specific expertise
    A lesson learned from the past is that not nearly enough was invested in building and further developing specific expertise in the field of anti-money laundering. Hence an integral part of the FFCA will be its own training and professional development programme, which will directly link theory and practice within the agency. The entire anti-money laundering system in Germany can only move forward through strong cooperation. The Centre for Training and Education will therefore develop training measures for FFCA employees and additional key players in Germany’s anti-money laundering system at the federal and Land level.
  • Improving money laundering supervision in the non-financial sector
    Supervision in the non-financial sector (for example in the real estate sector, the goods trade and the gambling sector) will be better coordinated. Under the umbrella of the FFCA, the Central Office for AML Supervision (Zentralstelle für Geldwäscheaufsicht, ZfG) will develop uniform guidelines for supervision in the non-financial sector to ensure a coordinated approach by the decentralised Länder supervisory authorities. To this end, the ZfG will operate a statistics and reporting system that enables supervisory authorities to pursue a uniform risk-based strategy and assess the effectiveness of adopted measures. The ZfG will also use its own resources to provide targeted support to Land supervisory authorities, for example during supervisory visits. This will ensure an efficient use of resources overall, and enable the nationwide transfer of specific expertise in this area. Furthermore, the aim is to work together with the Länder to reduce the high number of supervisory authorities.
  • Improving registers
    Transparency on beneficial owners is key to preventing and prosecuting money laundering more effectively. The quality of the data in the transparency register will be improved by providing additional access authorisations to the register. This will make it easier to discover false entries and to initiate adjustments.

    Incentives will be provided for companies to disclose their ownership and control structures in the transparency register of their own accord, and, in future, a new real estate transaction register will give the relevant authorities fully digital access to real estate data.
  • Introducing administrative asset investigations
    The FFCA will play an important role in the fight against money laundering and the illegal concealment of assets in the context of financial investigations. For this reason, in addition to the measures already set out in the draft Combating Financial Crimes Act, a new, proportionate procedure for investigations into suspicious assets is to be created for the FFCA. This procedure is to be presented in a separate legislative proposal, but will be included as an essential part of the current reform package.