Germany 2021

Germany ranks well internationally in terms of corruption perceptions in Transparency International’s 2020 Corruption Perception Index with a score of 80/100 and a ranking of 9/180.¹ It was not ranked in the 2021 Basel Anti-Money Laundering Index but ranked 99^th out of 125 (with 125 being the best) in the 2019 ranking, below many of its EU counterparts.²

Germany scores well on World Bank Voice and Accountability Indicators, however, this has slightly decreased in recent years.³ Germany also scores well on press freedom, but its score suffers from weak access to information provisions, pressure on journalists from the far right, and attempts to push for laws that would undermine journalistic privacy of sources.⁴ Civil society in Germany is free and able to carry out its work.⁵

Germany ranks poorly on the Financial Secrecy Index at 14^th most secret, out of 133 countries ranked.⁶ While its secrecy score is ‘moderate’, this is affected by its large global market for offshore financial services. It has however improved since 2018, ranking amongst the biggest improvers worldwide, due to improvements in ownership registration, legal entity transparency and integrity of tax and financial regulation.⁷

Some cases with potentially illicit assets in Germany have been identified as part of investigations outside of Germany (particularly in the US) and by investigative journalists, but there seems to be little apparent follow-up in Germany. As such, Germany continues without any high-profile asset recovery cases and, while several of its OECD peers have successfully used alternative approaches to asset recovery in the past, Germany has only very recently taken steps to catch up.⁸

Germany is a destination and transit point for stolen assets. Asset recovery is complicated through decentralised responsibilities and a general lack of transparency around the issue of stolen asset freezing, prosecution and recovery.

While official statistics are lacking, estimates put illicit assets laundered in Germany at approximately €100 billion per year based on an extrapolation of suspicious transactions observed by obliged entities under the anti-money laundering legislation, at €43-57 billion based on national crime statistics including tax evasion and avoidance, and at €29 billion without tax avoidance.⁹

Recent cases of asset recovery involving Germany have included:¹⁰

• de Achaval and Macri / Argentina
• Hosni Mubarak / Egypt
• Bacharuddin Jusuf Habibie / Indonesia
• Rackat Alijev / Nursultan Nasarbajew / Kazakhstan
• Muammar al Gaddafi / Libya
• 1MDB / Malaysia
• Abacha / Nigeria
• Russian Laundromat / Russia
• Ben Ali / Tunisia

Further, in Germany, there are no official statistics on mutual legal assistance requests, and information on individual requests is confidential. According to estimates, Germany receives less than 100 mutual legal assistance requests from developing countries per year and very few of them are related to asset tracing and asset recovery.¹¹

Asset recovery reform

While Germany has implemented the EU’s 5^th Money Laundering Directive, made its beneficial ownership register public in 2020 and “has become one of the first countries worldwide to oblige foreign real estate buyers to register in the local beneficial ownership register”,¹² several problems have been identified with regards to how Germany polices beneficial ownership. This includes Germany specific challenges, such as being one of four EU/EFTA countries where registration is not mandatory, and having a beneficial ownership register that has poor integration with the company register, charges for access, and contains information neither provided instantaneously nor in machine-readable or machine-searchable form, as well as the EU-wide challenge of a high threshold for inclusion in the register, at 25%.¹³

Germany reformed its confiscation rules significantly in 2017. The new law allows asset confiscation without a completed criminal case and with a lower burden of proof for cases of organized crime and terrorism. Several federal states have introduced or strengthened dedicated asset recovery units, and initial evidence points to a significant increase of asset confiscations. Nevertheless, the reform was not primarily targeted at the recovery of illicit assets obtained through corruption and hidden overseas, and the impact of these new provisions in this respect remains unclear.¹⁴

Germany also moved its Financial Intelligence Unit (FIU) in 2017 from the Federal Police to the Central Customs Authority, under the Ministry of Finance. According to interviews, the new FIU can potentially exchange information through administrative channels, analyze suspicious transaction reports without needing sufficient evidence of a crime and institute administrative asset freezes. Nevertheless, unlike in the UK where such asset freezes can be extended without limits, in Germany they are valid only up to one month.¹⁵

Germany has been a member of the Financial Action Task Force since 1990¹⁶ and is an observer to the Eurasian Group (EAG), Asia/Pacific Group on Money Laundering (APG) and the Financial Action Task Force of Latin America (GAFILAT). The next mutual evaluation of Germany is due in 2021-2022.¹⁷ It is a member of the Camden Asset Recovery Inter-Agency Network¹⁸ and has participated in several international forums.

German authorities have become more involved in multilateral discussions on asset recovery in recent years, with the GIZ and Federal Ministry for Economic Cooperation and Development holding a Global Forum on IFFs and sustainable development in 2020 and 2021.¹⁹

Asset recovery in Germany faces several challenges. Information is very difficult to access on the extent to which Germany is engaged in investigating, freezing, confiscating and returning stolen assets, with it being likely that little is being done. Germany is nevertheless an important destination for money laundering, with estimates between the tens and a hundred billion Euros laundered through Germany each year. There is therefore a large risk that corrupt wealth is being laundered through Germany.

Further, problems with the institutional architecture mean that Germany is also not best placed to address money laundering and the recovery of stolen assets. These challenges also affect the ability of civil society, in particular investigative journalists, to carry out their work, with beneficial ownership information particularly challenging to access.