Money laundering – we are a nation of offenders!

After the German legislator had only reformed the German Money Laundering Act in 2017 due to European requirements, he must now hurry again, because the EU has given it only until the end of the year 2020 to implement renewed tightening of the regulations against money laundering (see for the previous fundamental reform of 2017 here). Thus, the German Bundestag has already on 20 November 2020 – relatively unnoticed by the public – debated in first reading on the “Draft Act to improve the criminal law fight against money laundering”. The law contains at least a paradigm shift, which should make the new provison of § 261 StGB (Strafgesetzbuch, the German Criminal Code) also “interesting” for the German Michel:

The 24th (!) revision of this section since 2001 provides for the elimination of the so-called “predicate offense catalog” – with which the German bill clearly exceeds the requirements of the EU. The former highest criminal judge of the Republic, Prof. Dr. Thomas Fischer, points out the consequences of this already far advanced legislative activity, which are highly questionable in terms of the rule of law, in a very readable commentary on (here, in German):

“The intended expansion, however, not only has quantitative consequences, in that the number of suspicious cases and proceedings will grow extremely. Rather, it also qualitatively shifts the battlefield from the hitherto at least still claimed pursuit of serious crime to an unlimited, boundless area of everyday crime. This can only be done by again expanding the surveillance instruments. The concept can only be complete if every movement of money and assets really is registered, controlled and checked. To create the conditions for this, there are quite effective measures: Extensive abolition of cash payments, the most comprehensive possible control over all account movements, auditing and reporting obligations for as many professions and business sectors as possible. Citizens will be required by law to monitor each other and report all suspicious activities to government “combating” agencies.”

And then clarifies:

“This can be dismissed with the childish phrase that if you have nothing to hide, you have nothing to fear. The sentence, which Kim Jong Un is also in the habit of saying to his subjects, is wrong, because any surveillance changes people’s behavior and has a significant impact on their attitude to life. In a world dominated by large-scale dangers and inscrutable interconnections, control and prevention are unavoidable and necessary. But it turns from a prerequisite of security itself into a danger when it becomes an end in itself without being able to deliver on its promises.”

However, none of the 23rd previous amendments to money laundering regulations has yet been able to deliver on the promise of preventing or at least reducing money laundering. In particular, one should not be blinded by the “record reports” of suspected money laundering cases (here, in German). After all, the constant expansion of the scope of the provision in previous years means that more and more transactions inevitably fall within its scope. And the reporting of a “suspicious activity” does not equalize proof, as the continuous failure of the German “Financial Intelligence Unit” of the customs authorities, which is supposedly specialized in combating money laundering, shows in general (here, in German), but also in prominent cases such as Wirecard (here, in German). On the contrary, lawmakers are likely to react to the likely further increase in suspicious activity reports with new drastic measures – also hinted at by Mr. Fischer – up to and including a ban on cash in order to be able to monitor all transactions. And in case of doubt, the “little fish” will be hunted rather than the wirecards of this world – simply because the crime is much easier to prove. It is therefore to be expected that the criminal law “screw” will be tightened further and further. And, as the saying goes? “After tight comes off!” Or, to put it more intellectually with Albert Einstein: “The definition of insanity is doing the same thing over and over again and expecting different results.” But then, legislators have never been interested in that.

Directive (EU) 2018/1673 of the European Parliament and the Council as of 23 Oktober 2018 on combating money laundering by criminal law

BReg: Entwurf eines Gesetzes zur Verbesserung der strafrechtlichen Bekämpfung der Geldwäsche, BT-Drs. 19/24180 (in German) 

BMF: „Stra­te­gie ge­gen Geld­wä­sche und Ter­ro­ris­mus­fi­nan­zie­rung“ (cf. also here) (in German)

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