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Germany's FIU chief Schulte resigns after FATF wasn't informed of 100,000 unprocessed SARs

THE HEAD OF DEUTSCHLAND'S FIU has resigned amid a scandal over FATF failing to address a significant backlog of unprocessed SARs.


The incident taints Germany's recent FATF assessment and is the latest to harm Germany's anti-financial crime credibility.


The controversy is likely to have an influence on Berlin's efforts to attract the new EU AML Authority to Frankfurt.


Christof Schulte, the country's FIU chief, has resigned. The German finance ministry informed parliament of Schulte's resignation, initially stating that it was for "personal reasons."


According to German media, the FIU has a backlog of more than 100,000 unprocessed SARs (Suspicious Activity Reports) that has been accumulating since early 2020.



Schulte, on the other hand, informed lawmakers in February that there was no processing delay.


Just last week, the government confessed in response to a written query from an opposition MP that the FIU did not report the backlog to the Financial Action Task Force, which reviewed Germany's anti-money laundering measures from November 2021 to June 2022.


Significantly, the FATF complimented Germany for taking "a number of good actions" to "strengthen the role of the FIU" in its August evaluation report.


The report also said the country needed to do more to “make sure that there is resourcing and prioritisation at the operational level to combat illicit financial flows.”


In reaction to the findings, the FATF stated that "mutual evaluations are a confidential process," but did not elaborate.


According to a letter from the Federal Ministry of Finance to the Bundestag's Finance Committee, Mr Schulte requested to be "released" from his position and "transferred" elsewhere for "personal reasons."


The country's FIU, which is part of the General Customs Directorate under the Federal Ministry of Finance, has come under fire for claiming that "thousands of suspicious cases" have accumulated in the Central Office for Financial Transaction Investigations.


According to Der Spiegel, the institution first came under fire immediately after it was founded in 2017, when former Finance Minister Wolfgang Schäuble transferred the FIU from the Federal Criminal Police Office (BKA).


In 2018, the body was chastised when it was revealed that "tens of thousands of indicators of questionable transactions... gathered at customs in Cologne" following submissions by banks and financial institutions.


Mr Schulte took over the unit in 2018 and planned for a "fresh start," but a 2021 poll performed by the media outlet revealed that court authorities were sceptical of the FIU.


The former FIU Chief will now take on a new role inside the General Customs Directorate in Directorate V (General Customs Law), while his deputy Department Director Tilman Peters will take over the FIU's management responsibilities.


Schulte, who had led Germany's Financial Intelligence Unit since 2018, is the fourth German supervisory body leader to be fired since 2021. In conjunction with their authorities' failed handling of the Wirecard affair, the leaders of financial watchdog BaFin, audit regulator Apas, and accounting regulator FREP were all fired.


Mr Schulte's permanent replacement has yet to be named, but the letter indicates that "the change of the leadership of the FIU will be pursued with high priority."


Matthias Hauer, Chairman of the CDU/CSU parliamentary group, told the German news agency dpa that Mr Schulte's retirement had become clear in recent weeks.


“At the FIU, more and more unprocessed money laundering suspicion reports have been piling up for months and at the same time, both the FIU and Federal Finance Minister Christian Lindner are pursuing secrecy,” he said.


“Just recently, more than 100,000 suspicious activity reports that are currently not being processed came to light,” added Mr Hauer.

By fLEXI tEAM



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