Money-Launderers Find Haven in Germany

Real estate laws and regulations in Germany have made the country a hotbed for the crime of international money laundering, according to a report from Deutsche Welle.

About 30 billion euros “of suspect origin” were funneled into real estate in Germany in 2017, says the anti-corruption organization Transparency International. It is now proposing a series of measures to fight the practice.

The measures applied by the German government so far to stop the fraud, which is accomplished through real estate transactions, have not been effective, the organization stated.

Criminal networks, particularly the Italian Mafia, take advantage of legal loopholes in the German real estate sector to launder money. Overall, it is estimated that 15 to 30 percent of proceeds from all criminal activity are invested in real estate, through building and renovating, buying, selling and even renting properties.

The transactions are usually run through frontmen whose names do not appear in legal databases and are not known to the authorities. Of the 60,000 suspicious transactions which took place in 2017, only 20 came from real estate agents, which is typical, according the organization.

“The existing laws and the resources of the investigating authorities are disproportionate, particularly in view of the unlimited nature of international financial flows,” Transparency Germany chief Edda Muller told Deutsche Welle.

Transparency International is now suggesting that Germany proceeds with sweeping reforms in the real estate sector. Loopholes still allow parties to hide the true beneficiaries of real estate transitions despite the “transparency register” database created in 2017.

Unlike the situation in most countries, the notaries who record real estate title transfers are bound to client confidentiality in Germany. Transparency International suggests that such laws must not apply when a notary suspects criminal activity.

Amazingly, land title records are not currently accessible to the public in Germany although the authorities are in the process of digitizing and centralizing the records.

Transparency International calls for this process to be expedited, and for the registers to be opened up to the public. According to the organization, this would accomplish a great deal in the global fight against money laundering.