German finance ministry raided in money laundering probe
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.
SUSPECT TRANSACTIONS
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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