On August 24, 2022, German Finance Minister Christian Lindner outlined his plans for a more powerful fight against financial crime and more effective enforcement of sanctions in Germany in the form of key points. In contrast to some of the FDP leader’s other proposals, the plans have received a lot of support. If that’s not a reason for us to take a closer look at Mr. Lindner’s ideas:
Bundling competencies in the fight against financial crime and sanctions enforcement
The first component in the plans of the German Finance Minister is the bundling of competencies in the fight against financial crime and sanctions enforcement. To this end, a new authority is to be created in the form of a Higher Federal Authority for Combating Financial Crime. With a Federal Police Office for Financial Crime to be established, the already existing Financial Intelligence Unit (FIU) and a new central office for anti-money laundering supervision, the new authority is to consist of three pillars. One of the core tasks of the Federal Police Office for Financial Crime is to investigate complex cases of illicit financial flows and follow the path of incriminated money. In addition, the Federal Police Office for Financial Crime is also to play a significant role in enforcing sanctions. In the non-financial sector, the new central office is to assume a coordinating role for the money laundering authorities of the federal states and become the point of contact for the new EU Anti-Money Laundering Authority (AMLA). The FIU is to become more efficient, although the key points do not contain any specific statements on how this is to work.
Better training for investigators
In addition, the German Finance Minister wants to have highly qualified financial investigators. To this end, there are to be training measures. In addition, experts are to improve the existing concepts.
More digitisation and linking of registers
Finally, the digital linking of relevant registers should make it possible to check ownership structures and beneficial owner information efficiently. Until this goal is implemented, interim measures are to provide direct added value.
Strengths and weaknesses of the concept
I think that Mr. Lindner’s concept contains some promising approaches. In particular, bundling competencies in the area of financial crime is to be welcomed, as several hundred authorities in Germany are currently responsible for combating money laundering and terrorist financing. It also certainly makes sense to give the fight against financial crime more attention through a new federal authority. After all, no one can object to better training for investigators. On the other hand, I think it is counterproductive that even under Lindner’s plans there will still be numerous responsible federal and state authorities. As money flows do not know borders between German states and the quality of the supervisory authorities already varies widely, I see this as one of the major weaknesses in the federal finance minister’s concept. To be fair, however, it has to be said that a nationwide change in responsibilities would require an amendment to the Grundgesetz (Germany’s Constitution). Nevertheless, I wonder why the attempt is not at least being made. Incidentally, one has to see how Christian Lindner intends to achieve the goals he has set in concrete terms. Better training for investigators is not enough if the remuneration for these people is often only a fraction of what people with the corresponding qualifications earn in the private sector. Nor will digitisation alone help as long as suspicious money laundering reports cannot be processed by the FIU, or can only be processed with considerable delay, simply due to the sheer volume (or the under-equipment of the authority). It might also help if the investigative authorities worked with industry to develop standards for identifying and reporting suspicious cases.
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