Gangsters' paradise

Germany: A great place for money laundering

money laundering in germany
In hot pursuit. Source: DPA

Cops have been cracking down on organized crime this sweltering summer in Berlin, though many say it’s a losing battle.

Police raided 13 apartments last month in the district of Neukölln, trying to track down 16 people they suspect of money laundering. Neighbors looked on in horror as officers snapped pictures, shot video and carted off hardware. The raid followed months of sifting through clues and coordinating with other states’ security forces.

Germany is one of the first choices for gangs worldwide when it comes to washing dirty money, as a Sicilian official recently confirmed. “I’d invest in Germany,” said Robert Scarpinato, Palermo’s public prosecutor. “It’s a gangster’s paradise,” echoed a politician from Germany’s Left Party.

Berlin tightened laws last year in an attempt to stanch money laundering. But crime has paid too well for too long in Germany, attracting gangs from Russia, Italy and the Middle East. In 2016, authorities took up 563 organized crime cases relating to money laundering via real estate.

world money laundering index 2017

Germany’s stable economic situation is a magnet for Italian gangs, and Calabria’s ‘Ndrangheta is believed to launder 80 percent of illegally gotten gains in Germany — about €40 billion ($45.6 billion). The group’s money laundering activities go way beyond the real estate sector, according to reports.

Until last summer, Germany’s lax laws did not require criminals to prove their money had been earned legally. There’s a requirement for some proof, but it isn’t as stiff as in Italy. Plus, cops were stalled by the requirement that they prove money was earned unlawfully before seizing suspects’ assets. Burkhard Körner, president of Bavaria’s domestic intelligence agency, pointed out that it is hard for authorities to distinguish between money that’s earned legally and illegally, and to demonstrate the latter.

But the summer raids were spurred by a change in the law that puts the onus on suspects to prove they’ve obtained their assets through legal means. The operation in Neukölln was one of 77 raids targeting the R. family (German media does not publish full names of those accused of crimes).

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Police also hoped to link the Arab-Lebanese network to a theft from a Berlin museum last year in which thieves made away with The Big Maple Leaf, a 100-kilogram gold coin. Investigators accuse the group of committing attacks, robbery and murder.

Thanks to thrillers like “4 Blocks,” dramatic documentaries and media reports, one could believe Berlin is being carved up by family gangs from the Middle East. The situation is more complex: Research shows that only 2 percent of organized crime in Berlin is committed by such clans as they are called here. Some stats suggest the police are catching up, able to solve 93.9 percent of money laundering cases in 2017. The trouble is that these money laundering crimes lack concrete events and suspects, making it difficult to complete or even start an investigation.

Bureaucracy also slows the hunt. This summer’s raids have their roots in a robbery four years ago, when thieves blew up a Mariendorf bank branch and made away with €9.2 million. Mr. Körner complained that prosecutors lack access to databases on federal and state level, meaning they don’t have all the information they need. And the range of ways money is laundered is broad: Smugglers often carry cash across borders, then set up betting shops, restaurants and other outlets. Plus, witnesses and officials who could provide evidence are systematically intimidated.

money laundering in germany graphic

German banks spend increasing sums to combat the money laundering problem, but they say new regulations cost time and money, too.

The new finance minister wants to move faster, but the ministry’s relatively new Financial Intelligence Unit has also attracted criticism for moving too slowly on tips about crime. It had a sizable backlog of 30,000 cases this February, with another 5,600 suspicious activity reports arriving each month, only by fax. Staff spoke of a “security catastrophe” at the FIU, calling it overworked and understaffed. Valuable information is only passed on to relevant departments six months after crimes are committed. The unit knows about the problems, which has taken on new staff and is streamlining. But there is clearly a long way to go.

Rene Bender, Anna Gauto, Martin Greive, Jan Hildebrand and Volker Votsmeier worked on a longer version of this story. Allison Williams adapted this article into English for Handelsblatt Global. To contact the authors: A.Williams@handelsblattgroup.com

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