The German Finance Ministry has revealed its plans to create a new financial crime authority that would bring several fragmented competencies, including sanctions enforcement, under one roof.
According to fintech.global, Germany currently has more than 300 supervisory bodies, and the country’s finance ministry has sent a clear message that this number should be reduced.
One solution is to create a new financial crime authority that would incorporate multiple competencies under one umbrella. As a result, the country should have an easier time solving difficult international money laundering cases.
The new authority would be backed by the current FIU unit, which receives suspicious activity reports. As for the non-financial sector, a coordination unit will be established to supervise it.
Reuters revealed that BaFin, Germany’s financial authority, called on Allianz in August 2022 to improve its internal controls following fraud at its US funds unit. Earlier in 2022, Allianz agreed to pay over USD 6 billion while its US asset management unit pleaded guilty to criminal securities fraud over the collapse of a group of investment funds at the beginning of the COVID-19 pandemic.
According to Thomson Reuters Practical Law, the Federal Financial Supervisory Authority (BaFin) has powers to investigate and prosecute administrative offences concerning stock-listed companies. The Federal Office of Justice (Bundesamt für Justiz) can act when it comes to other corporations.
If BaFin uncovers that a criminal offence may have been committed, they must notify the public prosecutor. If they uncover that a regulatory offence may have been committed, they must inform the relevant law enforcement agency.
BaFin also has the same investigative powers as a prosecutor when investigating administrative offences. However, the Authority cannot prosecute criminal offences, which is why it must file a complaint with the prosecutor instead.
Dw.com reported that the Financial Action Task Force, an intergovernmental body that sets international standards for policing money laundering and terrorist financing, has given Germany a mixed review.
The report states that Germany has made significant reforms in the past five years but has been slow to implement them. Moreover, the FATF believes that Germany should continue to prioritise the implementation of these reforms at the operational level and continue to improve the collection, analysis, dissemination, and use of financial intelligence.
When it comes to freezing terrorist assets, the FATF added that Germany could stand to be more proactive in the use of targeted financial sanctions as a preventive measure.
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