Money Laundering

Why is Germany still an "Eldorado for money laundering" and to whom do the requirements of the Money Laundering Act apply?

Experts estimate the amount laundered annually in Germany at up to 100 billion Euro. Reasons for this include:

  • Still high cash holdings

  • A large and strong economy and a major financial centre, especially in the European region

  • EUR is an interesting currency due to its prevalence in Europe for organised crime and tax evaders

  • High volumes of drug smuggling due to major airports and ports (e.g. Hamburg port, Frankfurt and Munich airports).

  • Widespread informal economy with billions in turnover (e.g. construction, transport & logistics)

Only in recent years has the reporting of suspicious activity reports (SAR) been improved (e.g. in 2018 there were around 77 thousand reports, in 2021 already around 299 thousand suspicious activity reports). Likewise, the clearance rate of money laundering offences has only been increased in recent years. This is particularly due to the fact that the sanction measures for a violation of the Money Laundering Act have increased considerably - in the maximum case, high fines and, depending on the offence, corresponding prison sentences are threatened - and the catalogue of predicate offences for money laundering has been greatly expanded. In addition, the 5th money laundering reform expanded the circle of obligated persons to include, among others, real estate agents, art dealers and notaries.

Obligated companies must ensure that the following safeguards, among others, are implemented:

  • Designation of a money laundering officer

  • Development and implementation of internal policies and business and customer related security systems

  • Risk analysis of all business and customer relationships with regard to the specific money laundering risk

  • Ensuring continuous monitoring with regard to compliance with the applicable money laundering requirements

  • Regular sensitisation of employees

  • Submitting a SAR to the relevent authorities

I will be happy to support you in your tasks.

Performance elements

  • Support in setting up and implementing a customised money laundering management system

  • Insourcing of the Money Laundering Officer function

  • Conducting trainings in the area of money laundering incl. presentation of "best practice" models in the area of transaction monitoring and "know-your-customer" processes

  • Auditing of an existing money laundering management system in accordance with DIN/EN ISO 19011

  • Contact for authorities

  • My "expert view from the outside" on existing processes to optimise your company procedures

What does money laundering mean?

A brief overview

Money laundering is the smuggling of illegally generated funds into the legal financial and economic cycle. Since the money to be "laundered" comes from illegal activities such as fraud, prostitution, tax evasion, trade in sanctioned goods or drugs, its origin is to be concealed. In this respect, it is important that illegally obtained money can be converted into officially registered means of payment. For this purpose, money laundering usually uses the 3-phase model of the

  • Placement of funds from illegal activities into the economic system

  • Concealment of the illegal origin of the funds

  • Integration of funds into the normal economic cycle

The three-phase model

At the end of the three phases, the money is "clean", i.e. the connection to the predicate offence can no longer be proven or can only be proven with difficulty.

The_three-phase_model