Germany is to establish a new beefed-up anti-money laundering authority, following widespread criticism of its failure to crack down on white-collar crime.
The new agency will be called the Federal Authority for Fighting Financial Crime, or BBF in German. It will be guided by the principle of “follow the money”, said a senior official.
The move follows a critical report issued last August by the Financial Action Task Force, a Paris-based intergovernmental agency that sets standards for limiting money laundering and the financing of terrorism.
It said Berlin needed to “do more to proactively and systematically investigate and prosecute money-laundering activity, in line with [its] risk profile”.
The creation of the agency also follows the fall of payments giant Wirecard, whose collapse in 2019 turned into the biggest accounting scandal in Germany’s postwar history.
Laws passed in the wake of Wirecard’s collapse granted the financial watchdog BaFin extensive powers to probe the accounts of Germany’s most important listed companies and tightened rules for auditors.
Germany’s existing anti-money-laundering agency, the Financial Intelligence Unit (FIU), will be integrated into the BBF, which will also be responsible for enforcing international sanctions.
The FIU has long been under fire over its slowness in dealing with reports of suspicious financial activity. German media reported last year that it was sitting on a backlog of more than 100,000 such reports. Officials said that by March 21, the backlog had been reduced to 30,000.
“The aim of the new agency . . . is to strategically realign the fight against money laundering in Germany,” a senior official said.
The authority would “concentrate on meaningful cases of international money-laundering . . . large-volume, complex, systematically organised [crimes] . . . that are planned from Germany or have some kind of German connection”, he said.
“Where we see suspicious activity on financial markets, in payment flows, in carousel or securities transactions . . . we will investigate it along the money flows,” he said.
Money laundering has long been seen as a serious problem in Germany, where cash is used in many transactions that in other countries would occur digitally.
In its report last year, the FATF said domestic co-ordination across Germany’s 16 states was a “challenge” and called for better co-operation between its different supervisory and law enforcement agencies.
“Priority should also be given to mitigating the risks associated with the high use of cash in the country and the use of informal money or value transfer services,” it said.
Officials say one of the FATF’s main criticisms of Germany was its failure to successfully investigate enough “big fish” in the world of money laundering.
The head of the FIU, Christof Schulte, resigned last December after the government admitted that the FATF had been kept in the dark about the extent of the backlog of cases at the agency.
Schulte will be succeeded by Daniel Thelesklaf, a Swiss citizen who finance minister Christian Lindner has said is a “proven expert in the fight against money laundering”.
The finance ministry will submit a bill on the creation of the new authority to the Bundestag in the coming months.
