By Hans Seidenstuecker and John O’Donnell, Reuters — Thursday 9 September 2021
BERLIN/FRANKFURT, 9 September (Reuters) — German prosecutors raided the Finance and Justice Ministries on Thursday as part of an investigation into the government’s anti-money laundering agency, the Financial Intelligence Unit (FIU), putting a spotlight on Germany’s failings in tackling financial crime. The probe is examining whether the FIU, an agency of the Finance Ministry under Social Democrat chancellor candidate Olaf Scholz, was told to ignore warnings 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 26 September, and cast a cloud by refocusing attention on the ministry he runs. The FIU and BaFin, the financial regulator, which also answers to Scholz, have already been under scrutiny for failing to spot problems at payments firm Wirecard, which collapsed last year in Germany’s biggest corporate fraud.
A spokesman for 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. Prosecutors said the FIU was alerted by banks because of concerns the money was linked to trafficking of arms and drugs and terrorism financing; the FIU took note of the reports but did not forward them to law enforcement agencies. Prosecutors 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. The probe comes as Germany’s anti-money laundering efforts are under review by the Financial Action Task Force (FATF), the global body that groups countries from The United States to China to tackle financial crime. “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.”