Germany’s progress in strengthening measures to tackle money laundering and terrorist financing

The present „Anti-money laundering and counter-terrorist financing measures Germany, 1st Enhanced Follow-up Report“ provides an assessment of Germany’s progress in addressing technical compliance deficiencies identified in its MER by the FATF. The report was adopted by the FATF Plenary in November 2023. The purpose of the report is to analyze Germany’s progress in improving technical compliance and to re-rate the country on specific FATF Recommendations based on this progress.
The report highlights Germany’s progress in addressing technical compliance deficiencies, particularly in relation to Recommendations 6 and 7. It outlines the specific criteria within these recommendations and provides a detailed analysis of Germany’s progress in meeting these criteria. The report indicates that Germany has made significant progress in addressing the deficiencies identified in the MER, leading to re-ratings on Recommendations 6 and 7, both re-rated from Partially Compliant to Largely Compliant.
Concerning Recommendation 6 (Targeted financial sanctions related to terrorism & TF), the 2022 Mutual Evaluation Report highlighted a major deficiency in Germany’s TFS framework, specifically regarding the implementation without delay on weekends or holidays. To address this, Germany introduced a new section (5a) in the Foreign Trade and Payments Act („Außenwirtschaftsgesetz“ – AWG) related to criterion 6.4. As a result, Recommendation 6 is re-rated as „Largely Compliant“ since the corrected deficiency was a significant factor in the original evaluation, and other remaining deficiencies are considered minor.
Concerning Recommendation 7 (Targeted financial sanctions related to proliferation), the 2022 MER, Germany’s regulatory framework for implementing TFS faced a major issue—AWG orders couldn’t be issued on weekends or holidays. To address this, a new section (5a) was added to the AWG, specifically targeting the deficiency in criterion 7.1 related to delayed implementation. Given the weight assigned to this issue, Recommendation 7 was re-evaluated and re-rated as „Largely Compliant.“ The inclusion of section 5a effectively addressed the primary concern, leading to an overall improvement in compliance status. Other identified deficiencies were considered minor in comparison. This highlights the significance of targeted regulatory amendments to enhance the timely implementation of sanctions, ultimately contributing to a more robust regulatory framework.
Furthermore, the report includes a table showing Germany’s MER ratings and updated ratings based on the progress made. It provides a comprehensive overview of the technical compliance ratings for each FATF Recommendation, indicating whether Germany is rated as compliant , largely compliant, partially compliant, or non-compliant. The table reflects the progress made by Germany and identifies the specific recommendations that have been re-rated based on the country’s efforts to address technical compliance deficiencies. Germany has 17 Recommendations rated Compliant and 20 rated Largely Compliant. Three Recommendations remain Partially Compliant. Germany will report back to the FATF on progress achieved in improving the implementation of its AML/CFT measures in October 2024.