German finance ministry raided in money laundering probe
© Reuters. FILE PHOTO: 20 Euro banknotes are seen in a picture illustration, August 1, 2016. REUTERS/Regis Duvignau/Illustration//File Photo
By Hans Seidenstuecker and John O’Donnell
BERLIN/FRANKFURT (Reuters) -German prosecutors raided the finance and justice ministries on Thursday as part of an investigation into the government’s anti-money laundering agency, putting the spotlight on Germany’s failings in tackling financial crime.
The probe into the Financial Intelligence Unit, an agency of the finance ministry under Social Democrat chancellor candidate Olaf Scholz, is looking at whether the unit was told to ignore warnings from banks of suspect payments to Africa.
The raids come at a pivotal moment for Scholz, who opinion polls suggest has a good chance of becoming German chancellor in national elections on Sept 26.
The FIU, along with the Germany’s financial regulator, Bafin, both under the finance ministry, have previously been criticised for failing to detect problems at payments company Wirecard, which collapsed in the country’s biggest post-war fraud scandal.
Opposition lawmakers were swift to criticise Scholz.
“This is a security risk for Germany,” said lawmaker Fabio De Masi. “We need a financial police with criminal expertise. Germany is a paradise for criminals.”
The Finance Ministry said it had bolstered staff at the FIU agency from 165 to more than 460, as well as giving it more responsibility and technical resources.
The ministry said in a statement that it supported the investigation and noted that suspicion was not directed at the ministry’s employees.
The probe comes at a critical moment, as the country’s anti-money laundering efforts are under review by the Financial Action Task Force (FATF), a global body that groups countries from the United States to China, to tackle financial crime.
The FIU has long struggled to keep up with the tens of thousands of warnings it receives about suspect money transfers, according to people familiar with its work. It only stopped using fax machines to receive such reports from banks in the past few years, one German official has told Reuters.
A spokesman for the public prosecutors said they launched the enquiry after receiving complaints that the FIU had not acted on millions of euros of suspect transactions, including to Africa, between 2018 and 2020.
He said they had searched the ministries to see whether the agency had been told to ignore the suspect money flows.
Prosecutors said the agency was alerted by banks because of concerns the money was linked to trafficking of arms and drugs and terrorism financing, saying that the FIU took note of the report but did not forward it to law enforcement agencies.
The prosecutors said they were also looking into the fact that since the FIU took over control of money laundering in 2017, reports of suspicious activity have dropped drastically.
They said that previous searches of the FIU had revealed that there had been extensive communication with the ministries that were searched on Thursday.
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