GLOBAL FINANCIAL CRIME REVIEW
Journalist and author of anti-Mafia publications Petra Reski believes the German government is not doing enough . “ There is no political will in Germany to fight the [ Mafia ]…. Because German politicians see the [ Mafia ’ s ] investment as an economic driver . Money comes , and they don ’ t want to know where it comes from .” 7
In its 2022 assessment , FATF highlighted real estate agents ’ lack of controls when it comes to cash , an issue Germany was aware of but has so far done little to tackle . 8
Hiding in plain sight
The weak supervision of cash is not the only issue plaguing the real estate sector . As demonstrated with Lisa Paus ’ case , land registers in Germany are not public , making it impossible , or complex , to obtain such information . 9
Berlin houses close to two million flats , of which a quarter are owned by private companies . Transfer of ownership registers are publicly available , but for companies that own a substantial number of subsidiaries , searching for an apartment ’ s owner means having to dig in each of Berlin ’ s registry offices with no certainty that the information can be given . 10
The situation becomes worse when shell companies are involved . The 6,000 apartments in Berlin owned by British billionaires the Pears brothers were bought using around 50 companies in Luxembourg , all linked by shell companies in Cyprus and the British Virgin Islands . Investment funds own between 5 % -10 % of the flats in Berlin , and many have been found to operate from offshore financial centers . 11
To counter this phenomenon , the German government announced in 2022 the creation of centralized access to real estate ownership . 12 The project was initiated on July 23 , 2023 . The Transparency Register must now receive information from all Land Registry Offices , including the owner ’ s name or the name of the business they represent , together with other important details . 13
But issues persist . After the European Court of Justice deemed that public access to beneficial ownership registers were “ invalid ” in a 2022 ruling , Germany immediately shut down open accessibility to its Transparency Register . 14
Lost in the void
The mammoth amount of suspicious activities derived from the ill use of cash , real estate and other enterprises have put a strain on Germany ’ s Financial Intelligence Unit ( FIU ).
In 2019 , German media reported that the unit had a backlog of over 46,000 suspicious activity reports ( SARs ) that it could not handle . Following the event , on July 14 , 2020 , state prosecutors entered the FIU with a search warrant to investigate the issue . 15
Christof Schulte , the head of Germany ’ s Financial Intelligence Unit ( FIU ), discusses the FIU ’ s annual report during a press conference in Cologne , Germany , in 2019 . Credit : Henning Kaiser / dpa / Alamy Live News
This did not improve the situation . In 2022 , media reports confirmed that the backlog had extended to 100,000 reports , which had shrunk to 30,000 by March 21 , 2023 . Christof Schulte , head of the FIU , resigned in December 2022 after the government admitted to keeping FATF in the dark about the extent of the backlog . 16
Germany ’ s FIU has three days to order a financial institution ( FI ) to block a suspicious transaction , but if no feedback is given during that period , the transaction may be carried out without delay , meaning tens of thousands of illegal payments have freely flowed through Germany ’ s financial systems in the past years . 17
Andreas Frank , adviser to the Council of Europe and German Parliament on financial crime , believes that the issue not only lies in the severe understaffing of the FIU but also because of authorities ’ hindrance to sharing data . “ It took years , up to 2021 and 2022 , for the FIU to be allowed
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