The European Commission has asked Germany to fully comply with EU laws regarding anti money-laundering (AML) and combating the financing of terrorism (CFT), in January 2011.
The Commission is concerned that two German Bundesländer have not yet assigned competent supervisory authorities to all entities which are subject to AML/CFT requirements, and Germany has thus failed to prevent the misuse of the financial system for the purpose of money laundering and terrorist financing. The Commission’s request to Germany takes the form of a reasoned opinion. If Germany does not reply satisfactorily within two months, the Commission may refer the matter to the EU Court of Justice.
What is the aim of the EU rule in question?
The anti-money laundering (AML) legislation (Directive 2005/60/EC) aims to protect the integrity, reputation and stability of the financial system, all of which are integral to the proper functioning of the Internal Market. Each Member State in the EU was required to adopt this legislation by 15 December 2007. The legislation requires the financial sector and other designated bodies and professions, including lawyers, real estate agents, and casinos, to comply with a number of obligations. These could include taking measures to identify their customers and reporting suspicious transactions. To ensure these obligations are adhered to, Member States are required to appoint competent authorities to supervise the way these entities fulfil their tasks.
How is Germany not respecting these rules?
According to German Anti-money laundering law1 the federal states or Bundesländer in Germany are responsible for assigning supervisory authorities to certain designated entities. However, not all German Bundesländer have appointed such supervisory authorities. There are deficiencies with regard to real estate agents, insurance intermediaries and providers of goods, when payments are made in cash in excess of €15 000. Deficiencies have been found in the following Bundesländer: Mecklenburg-Vorpommern and Sachsen-Anhalt.
How are EU citizens and/or businesses suffering as a result?
Money laundering is a major international problem. Whether the perpetrators are corrupt dictators, drug barons, human traffickers, fraudsters or racketeers, they all have one thing in common: the need to disguise the flow and deposit of money so that it appears legitimate. The movement of large sums of illegal money threatens both the stability and reputation of the financial system, thereby jeopardising the proper functioning of the Single Market.
Failure to adequately implement the requirements of AML and CFT legislation means that criminals and terrorist organisations can detect and exploit loopholes in the system more easily. The supervision of designated entities is thus an important element towards ensuring a sound and comprehensive AML/CFT system.
Latest information on infringement proceedings concerning all Member States:
For more information on infringement procedures, see MEMO/11/45