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Germany Approves Law Establishing AML Super Agency and Money Laundering Investigation Center

The German federal government has given its approval for a new law that paves the way for the establishment of an Anti-Money Laundering (AML) super agency and a Money Laundering Investigation Center (MIC). This legislation, titled "Improving the Fight against Financial Crime," is in response to issues raised in the 2022 FATF Mutual Evaluation Report of Germany.

Germany Approves Law Establishing AML Super Agency and Money Laundering Investigation Center

Under this new law, all essential AML functions within the public sector, including the Financial Intelligence Unit's (FIU) analysis, criminal investigations, and supervisory responsibilities, will be centralized under the newly formed Federal Financial Crime Agency (FFCA). Dr. Marcus Pleyer, the FFCA's project director, believes this will address the existing fragmentation of AML agencies.


A noteworthy development is the establishment of the MIC within the FFCA, which will have a singular focus on combating money laundering. This ensures that money laundering investigations do not get deprioritized in favor of other crimes when resources are allocated to agencies with broader crime-fighting mandates.

The MIC will investigate illicit financial flows and track money laundering activities carried out by professional money launderers and organized crime networks, addressing a concern raised by FATF regarding the strong focus on predicate offenses in German AML investigations.


Additionally, the FFCA will integrate the Federal Agency for Sanctions Enforcement and establish a Competence Center for AML training and education. An innovation and IT center will provide the FFCA with state-of-the-art technology tools for combating financial crime.


Dr. Pleyer emphasized that the Federal Government is working on a separate law to empower an Asset Concealment Investigation Center (ACIC) within the FFCA, focusing on administrative AML investigations, often referred to as suspicious wealth orders.


The draft law also includes improvements to the transparency register and the creation of a new register for real estate transactions. The bill will now undergo discussion and final decision-making in the German Parliament and the Federal States.


Former FATF executive secretary David Lewis commended the proposed measures, stating that they appeared to be robust and effective compared to efforts in other jurisdictions. Notably, Germany is centralizing control and modernizing AML efforts, despite its unique cash-intensive financial landscape.


However, regtech consultant Jim Richards expressed concerns about the lack of threshold-based cash transaction reporting in Germany, which is recommended by the FATF. Such reporting is considered essential in a cash-intensive jurisdiction like Germany.


Transparency International's Julian Brummer raised doubts about whether the FFCA would be adequately resourced, given the government's strict stance on budget expenditures. He cited the underfunding of the FIU as an example of potential challenges.


In contrast, Burkhard Mühl, the head of Europol's Financial and Economic Crime Centre, viewed the initiative as a significant step forward in the fight against money laundering, emphasizing its potential effectiveness.

By fLEXI tEAM

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