Germany’s Financial Intelligence Unit Reports Substantial Increase in Suspicious Transaction Report Filings in 2019

On August 18, Germany’s Financial Intelligence Unit (FIU) announced that it had issued its Annual Report for 2019.  The Report (available here) stated that in 2019, it received 114,914 suspicious transaction reports.  That total represents an increase of 37,500 more suspicious transaction reports than the FIU received in 2018.

All in all, the FIU reported, it has seen the annual number of such reports increase almost twelve-fold since 2009.  The FIU commented that this increase “reflects the continuous awareness of those subject to the Money Laundering Act and the increasing automation at large credit institutions.”

The Report also included findings regarding the filing of suspicious transaction reports by the financial and non-financial sectors:

  • Financial Sector: The increase in the number of suspicious transaction reports applies to both the financial and non-financial sectors, as well as to authorities and other covered entities. Approximately 98 percent of all reports still come from the financial sector, from which the FIU received more than 35,000 more suspicious transaction reports than in 2018.
  • Non-Financial Sector: The absolute number of suspicious transaction reports that the FIU received from the non-financial sector increased in 2019, but still only accounts for approximately 1.3 percent of the total.  Gambling organizers and brokers were primarily responsible for the increase in the non-financial sector.  The FIU also received “[s]ignificantly more reports” from goods dealers in 2019, with a percentage increase “roughly in line with the overall trend.”  It also saw an increase in the number of reports from real estate agents and financial companies.
  • Cryptocurrencies: The FIU also saw “a slight upward trend” in the number of suspicious transaction reports relating to crypto assets.  Approximately 760 reports contained as a reason for filing “abnormalities in connection with crypto currencies.”  In particular, it deemed the forwarding of funds to trading platforms abroad to exchange the funds for crypto assets, ​​with subsequent further transfer, “abnormal.”

The director of the FIU, Christof Schulte, welcomed these developments.  He stated that the upward trend in the numbers of suspicious transaction reports being filed “shows that the FIU’s extensive awareness-raising and coordination measures are working.”

Schulte also noted that the FIU’s risk-based approach and associated legal filter function – both also included in the standards of the Financial Action Task Force (FATF) – “are of particular importance.”  As he put it, “Only the facts that are actually valuable are passed on to the responsible law enforcement authorities so that law enforcement can efficiently concentrate available resources on these facts.”

Schulte cautioned that he did not consider the reports filed by the non-financial sector to be sufficient, in light of the money laundering risks in that sector.  He further stated that in view of the increasing number of crypto-related reports, the FIU “will also increasingly investigate transactions that were carried out using new payment technologies with regard to money laundering and terrorist financing.”

Note:  This FIU report is instructive, not only for the statistical data regarding suspicious transaction report filings, but also for the comments by Director Schulte about the volume of reports from the non-financial sector and increasing FIU focus on crypto-related transactions.  Whether  the FIU’s concentration on analysis of these reports will translate into actual enforcement cases by German prosecutors remains to be seen.  As Director Schulte admitted in a recent media interview, “One problem for us is that the prosecution of money laundering in Germany isn’t traditionally well established.”

In any event, chief compliance officers at German financial institutions and other entities subject to German money-laundering legal requirements should review the FIU report closely, and share pertinent details with other senior executives in their firms.

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