German Finance Ministry Raided Over Anti-Money Laundering

(Bloomberg) -- German prosecutors raided the federal finance and justice ministries in Berlin as part of a probe into whether officials at an anti-money laundering unit failed to handle cases correctly.

The investigation is looking into whether officials at the Financial Intelligence Unit -- part of the finance ministry under Social Democrat chancellor candidate Olaf Scholz -- failed to act on money-laundering warnings they received from banks, prosecutors in the city of Osnabrueck said Thursday in an emailed statement.

This comes at a sensitive point for Scholz, who opinion polls suggest has a good chance of becoming Germany's next chancellor after the Sept. 26 election. The finance ministry has been under scrutiny for the failings of its agencies, FIU and BaFin, to detect the Wirecard AG scandal.

Germany has come under repeated pressure from international organizations, like the OECD, and transparency campaigners that say the country massively failed to comply with anti-money laundering standards. The demise of Wirecard last year increased these worries as allegations emerged that the company was heavily involved in whitewashing money from illicit sources.

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The case, that started in 2020 over a warning sent to the FIU about a 2018 payment to Africa of more than 1 million euros ($1.2 million), is suspected to have linked to drug and weapons trafficking and terrorism. The FIU didn't inform police about it, which meant that the payment couldn't be stopped, prosecutors said. An earlier raid at the FIU showed that there was “extensive communication” between the ministries and the FIU. 

The raid was done to “probe whether and to what extent the leadership and responsible people at the ministries and other supervising units were involved in decisions by the FIU,” prosecutors said.

Spokespeople at the justice ministry -- also run by a Social Democrat, Christine Lambrecht -- and the FIU didn't immediately respond to emails seeking comment. 

“The aim of the the public prosecutor's action in several federal ministries is to get clarification of facts,” a spokesperson in the finance ministry said. “The underlying suspicion is expressly not directed against employees of the BMF.”

The raids were done to gather information from the ministry's section responsible for the FIU and how the its strategy was reviewed under legal rules, the ministry said. Scholz, increased the staff at the unit when he took office and also extended their powers, according to the statement.

Der Spiegel reported the raids earlier.

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