Germany has a “massive problem” with money laundering by criminal organisations in its property sector, according to a report by the German branch of Transparency International.
Billions of euros are washed every year through the German real estate market by serious criminals and corrupt officials from Germany and around the world, the report says. Transparency International estimates that Some 30 billion euros worth of criminal assets were laundered in Germany in 2017.
“For us it is clear: There is a massive problem with money laundering in real estate in Germany. The current laws and the equipment of the investigating authorities are out of all proportion to the limitlessness of international financial flows,” said Prof. Dr. med. Edda Müller, Chairwoman of Transparency Germany.
The report highlights failings in compliance with an anti-money laundering act passed in Germany in 2017 which stipulates that real estate agents, notaries and lawyers observe a “know your customer” principle and report suspicious transactions.
“The number of registrations in recent years shows that the key players report practically no cases and thus hardly contribute to the fight against money laundering, said Prof. Dr. Edda Müller in the report.
The Transparency Register of True Beneficial Owners, introduced as part of the same legislation, is not enough to create real transparency, according to the report.
“The transparency register still has too many loopholes. It cannot be that only representatives can be named instead of the true owners. Foreign companies that own real estate in Germany should also have to report their beneficial owners to the Transparency Register, “says Markus Henn, author of the study and financial markets consultant at WEED.
Transparency calls for the digitisation and centralisation of the land registers by the federal states to be implemented quickly. “The central land register must be made public in order to allow an audit of owners and thus discourage money launderers,” says Markus Henn.
The activities of the Italian mafia in Germany were highlighted last week when 14 suspected ‘Ndrangheta members and associates were arrested as part of raids that also took place in the Netherlands, Belgium and Italy, netting 84 suspects in total.
According to the Organized Crime and Corruption Project, the two-year investigation leading up to the arrests revealed a network of mafia owned restaurants and ice-cream parlours in Dusseldorf, Cologne and other German towns that were used as logistics hubs and money laundering fronts for the ‘Ndrangheta.