Anti Money Laundering (AML) in Germany
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Money laundering in Germany is an ongoing problem. Germany has put forth a strong effort to establish a sound Anti-Money Laundering (AML) system. The country’s legislation is fully incorporated with the Financial Action Task Force (FATF) Forty Recommendations on Money Laundering and takes active measures to combat terrorist financing. In 2002, the German government enacted a number of laws to improve authorities’ ability to combat money laundering and terrorist financing. These 2002 measures brought German laws into line with the first and second European Union (EU) money laundering directives.
Germany’s Money Laundering Act criminalizes money laundering related to narcotics trafficking, fraud, forgery, embezzlement, and membership in a terrorist organization. It also increases due diligence and reporting requirements for banks and financial institutions, and requires financial institutions to obtain customer identification for transactions conducted in cash or precious metals exceeding 15,000 Euros. The legislation also calls for stiffer background checks for owners of financial institutions and tighter rules for credit card companies. Banks must report suspected money laundering to the Financial Intelligence Unit (FIU) within the Federal Criminal Investigative Service (Bundeskriminalamt or BKA), as well as to the State Attorney (Staatsanwaltschaft).
In May 2002, the German banking, securities, and insurance industry regulators were merged into a single financial sector regulator known as the Federal Financial Supervisory Authority (BaFIN). Germany’s AML legislation requires BaFIN to compile a centralized register of all bank accounts in Germany. In 2003, BaFIN established a central database, which has electronic access to all key account data held by banks in Germany. Banks cooperate with authorities and use computer-aided systems to analyze their customers and their financial dealings to identify suspicious activity. Many of Germany’s banks have independently developed risk assessment software to screen potential and existing clients and to monitor transactions for suspicious activity.
In 2002, Germany also established a single, centralized, federal Financial Intelligence Unit (FIU) within the Federal Criminal Police. The FIU functions as an administrative unit and is staffed with financial market supervision, customs, and legal experts. The FIU is responsible for developing a central database for analyzing cases and responding to reports of suspicious transactions.
AML Training in Germany
According to Germany’s Money Laundering Act, an ongoing AML training program must be in place to keep employees continually up-to-date on new methods and techniques regarding money laundering. It is the responsibility of all employees to be aware of AML law and to know how to properly conduct customer identification to avoid financial crimes.
The Economy of Germany
The German economy is the fifth largest in the world. It made minimal growth from 2001-2005 which was accompanied by a very high unemployment rate. The high unemployment rate was due to a declining level of investment in industry, a lack of competition in the service sector, and high interest rates.
The recent boost to Germany’s economy has come from corporate restructuring and growing capital markets.
Banking in Germany
The Deutsche Bundesbank (German Federal Bank) is the central bank of the Federal Republic of Germany and, as such, is part of the European System of Central Banks (ESCB). Due to its strength and former size, the Bundesbank is the most influential member of the ESCB
Deutsche Bundesbank is a member of the European Central Bank (ECB). The ECB is the central bank of Europe's main currency, the Euro. The ECB’s primary responsibility is to maintain the purchasing power of the Euro.
The monetary functions of the ECB include: the opening of accounts for credit institutions, public entities, and other market entities; open market and credit operations; requiring credit institutions to hold minimum reserves; regulating to create an efficient and sound clearing and payments system; and cooperating with third country central banks, credit institutions, and international organizations.
The ECB has the exclusive right to set interest rates for the Eurozone.
The currency in Germany is the Euro, which serves as the currency of the 15 members of the European Central Bank. The states that have adopted the Euro as currency make up the Eurozone. These countries are: Austria, Belgium, Cyprus, Finland, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovenia and Spain. The Euro is the single currency for more than 320 million Europeans.
The Euro was first phased into the global economy in 1999. In the beginning, participating countries had to balance the use of both Euros and former national currencies. Beginning in 2002, national currencies were withdrawn.
The Euro comes in both banknotes and coins. Banknotes are available in 5, 10, 20, 50, 100, 200 and 500 denominations. Coins are available in 1, 2, 5, 10, 20, 50 cent pieces, and 1 and 2 Euro coins.
Other Key Statistics of Germany
Time Zone: CET (UTC+1).
Location: Central Europe, bordering the Baltic Sea and the North Sea, between the Netherlands and Poland, south of Denmark.
Population: 80,716,000 (2014 estimate.)
Languages Spoken: German.