117TH INTERNATIONAL SEMINAR
VISITING EXPERTS’ PAPERS

CURRENT SITUATION AND COUNTERMEASURESAGAINST MONEY LAUNDERING- A GERMAN AND EUROPEAN PERSPECTIVE
Peter H. Wilkitzki *I. PRELIMINARY REMARKS
I would like to attempt to describe as
exhaustively as possible both the problems
and the potential solutions related to thisvery broad topic, without at the same timelosing sight of the needs of legal
practitioners and of those who must
contribute towards legislation.
It is clear to me here that I am running
the risk of repeating many matters alreadydealt with exhaustively in the course of theseminar so far, and that the specificquestions on which you expect me tocomment may not be covered until the
discussion. On the other hand, as a
German and a European, I naturally see
the topic from the point of view of mycontinent, and hope that this reveals atleast something which is new andinteresting for you, and that I can perhaps
provide new details and facets.
II. WHAT ACTUAL AND LEGALPHENOMENA ARE WE DEALING
WITH?
Undoubtedly money laundering isclosely linked to organized crime. Actually,
it is the area where organized crime canbest be attacked and hurt. So, the primary
goal in suppressing organized crime must
be to optimise the siphoning off of theproceeds of crime. This is because crime,and organized crime in particular, depends
on making major profits. According to* Director General of Criminal Affairs Bureau,
Federal Ministry of Justice, Federal Republic of
Germany

estimates by the United Nations, theturnover of the worldwide illegal drug tradeis much higher than that of the oil industry(some authors even speak of USD 1 trillion
per year). Thus, organized crime is mostvulnerable at this “nerve centre”; andconversely, any criminal law policy,
however repressive it may be, is of little
use unless it addresses the question offunding and flows of money. What is ofparticular importance here is to prevent“dirty” assets being disguised andconverted into apparently “legal” money,
being “washed white”. The legal term thathas entered into English usage is “money
laundering” - which is by the way a termthat sometimes causes difficulties whentranslated into the specialist legal
terminology of other languages. [e. g.,
Chinese ].
Today, we are able to take as a basis asecure definition of the term “money
laundering”: This refers to the systematic
disguising of illegal assets by smuggling
them into the legal financial markets inorder to remove them from access by thecriminal prosecution organs and to retain
their economic value. The simplest case
can consist of cash or non-cash transfer ofillegally obtained money - mostly cash,
frequently in small monetary units. The
more refined forms are shown by crossborder transactions and/or bytransformation of illegal assets into “legal”
company holdings, real estate, etc. Many
authors distinguish between the first stage,
the “placement stage”, and the second, the“placement stage” where the money, once
being in the “circuit”, will be confusingly
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transferred hence and forth. (I will return
later to the specific risks connected withelectronic banking.)
Even if criminal law is always to be used
only as a last resort, there is no doubt thatmeasures embodied in criminal law must
be the focus of the suppression of suchgrievous, menacing phenomena as money
laundering. The primary measuretargeting the suppression of money
laundering must therefore be to criminalise
disguising the origin of the proceeds ofcrime, as well as the third party
acquisition, possession or use of articles
obtained as a result of criminal offences.
Here, the first question to arise is (evenif this may appear to you to be “typicallyGerman”): What is the legal interest
protected by the element of the criminal
offence targeting money laundering?
Firstly, it is the state’s administration ofjustice, and secondly it is the legal interest
protected by the element of the criminal
offence targeting the crime that preceded
it, which is otherwise known as the“predicate offence”. Some researchers feelthat this is too narrow; they consider theinterests to be protected by the element of
the offence to be constituted by the legal
economic and financial markets, or internal
security as a whole. One German author
ironically states that the legal interests
protected are just “global interests” thatcannot be defined more exactly; anotherholds that money laundering is just an“investigation concept commuted into acriminal offence”. This uncertainty, whichis unusual in criminal law, is connected tothe highly preventive characteristic of theelement of the offence that aims less tosanction the wrong done in the specificindividual case than it aims to address thegeneral, primarily preventive, impact of the
suppression of general economic and social
phenomena. To say it with another
German author’s words: Money laundering

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means a double strategy combining
criminal punishment of an offender - inpersonam - with siphoning off of proceedsof crime - in rem - (I will return later to thepreventive measures outside criminal law.)
What are the actions that must be
threatened with punishment? Once more,a distinction must be made between two
aims: Firstly, disguising articles resulting
from specific predicate offences, disguising
their origin through misleading activities,
preventing or hindering the identificationof their origin or their finding andconfiscation. Secondly, criminal law means
must be used to prevent third parties
obtaining, storing or using such articles (forthemselves or for others). Once more, we
are in the border area of prevention since
this alternative is intended to isolate
offenders from their environment
financially: If no one purchases the illegal
proceeds from the offenders, and they are
thereby prevented from employing them ingenuine legal transactions, those profits
become useless and valueless; the offence
becomes “not worthwhile” for the offenders.
To what “articles” can such actions refer?
To put it briefly: To all moveables andimmoveables, as well as to rights andreceivables. To be more specific: to money,
either as cash or deposits, precious metals
and stones, real estate, securities,
receivables, shares in companies and otherholdings. No limits are set to the (criminal)
imagination.
These articles must originate from asuitable “predicate offence”. It goes
without saying that this must be a criminal
offence; but not every criminal offence
qualifies as predicate offence (although ininternational fora, there is a growing
tendency towards recognition of thebroadest possible concept, the “all crime
principle”).

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Only those specific criminal offences thatare typical of organized crime are relevant.
The question of how these are to be
described within the legal framework canbe answered in a variety of ways:
Parliament can enumerate all suitablepredicate offences or categories of predicate
offence in laws (thereby running the riskof needing to amend the law should newforms or fields of crime arise), or it may
address the amount of the punishment
imposable in abstract terms (with the dual
risk of setting the threshold either too high,and omitting to cover some typicalpredicate offences, or too low, and wrongly
covering some predicate offences that are
atypical).
The best solution probably lies
somewhere in the middle, meaning in a
combination of abstractly encompassing all
grievous criminal offences above a certain
threshold of imposable punishment,
individually supplemented by somepredicate offences which are less grievous,
but which are typical of organized crime.
Criminological research has shown thattypical predicate offences to money
laundering are all property crimes, and inparticular fraud, breach of trust, theft,blackmail, corruption, crimes committed on
a commercial basis, the forging of
documents, drug offences, smuggling,trafficking in human beings, “red-light”
crime, computer and environmental crime,
terrorism and membership of a criminal
association (opinions are however divided
as to the last two categories).
It has proven advantageous, especiallyin cases in which the participation of themoney launderers in the predicate offencecannot be detected, to cover not only
predicate offences committed by a third
party, but also those committed by themoney launderers themselves, what can be
regarded as proof of the theory that, in fact,
the laundering offence aims atcriminalizing the predicate offence - the“front criminality” - rather than thelaundering act as such. (If, however, theoffender is sanctioned for the predicate
offence, there will be no additional sanction
for the laundering offence.) Because of thestrong international connections in thisarea, there is a real need also to include
predicate offences that have beencommitted abroad.
In practice, the main problem does notconsist in proving the predicate offence assuch, but in proving that the article“originates” from the predicate offence. In
contrast to the classical element of theoffence of fencing, the term “to originate”
is to be given a broad interpretation so thatthe “chains” of exploitative activities, which
are typical of money laundering, are also
covered, i.e. activities where the originalarticle is replaced by a second and then athird, etc., whilst retaining its value. Aslong as only the relationship to the originalarticle is retained, each surrogate is to be
involved; a border should only be drawn
where an article is “transformed” by theseparate performance of a third party, or if
it was obtained in good faith. The question,
which remains unresolved in most cases inthe statutory provisions, is that of how one
can proceed if a surrogate originates only
partly from the unlawfully obtained asset.
Attempted money laundering should bepunishable in the same manner as thecompleted crime. In addition to intentional
commission, negligent, or at least recklesscommission should be punishable, i.e.
cases where the offender omits to recognisebecause of gross carelessness what should
actually be obvious to anyone, namely thatthe article originates from a criminal
offence. Practitioners repeatedly issue calls
to go further, and to formally reverse theburden of proof, i.e. always to presume thatthe offender knew or should have known
that the article originates from a criminal

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act unless the offender proves the opposite.
Such statutory evidentiary rules that place
the accused at a disadvantage would
naturally meet the needs of practitioners;
however, they give rise to considerable
problems, partly constitutional in nature,
concerning their compatibility with theprinciple of guilt and the requirements ofcriminal proceedings based on the rule oflaw.
As money laundering constitutes serious
criminality, the level of sanctions to beinflicted must be rather high (in Germany,
there is a minimum sanction of 3 monthsof prison which theoretically excludes theapplication of fines and which - more
important - means that a lot of procedural
measures can be taken the use of which islimited to cases of serious crimes only.)
More important, and something to which
offenders are frequently more vulnerable
than to their punishment, is to deny them
the benefits of the assets that they haveacquired. Hence, the substantive law andprocessorial legal institutions thatfacilitate the seizure of such assets (andthe important provisional measures likefreezing and securing that precede it) is ofcentral significance, some authors call thisarea the “third dimension of combating
crime” - “crime must not pay”! Again we
observe an important shift from measures“in personam” to measures “in rem”, and it
is not for nothing that a major part of theinternational regulations (which I will be
describing later) concerns this area.
It is also practical to alleviate thepunishment of anyone who voluntarily
reports an offence that has not yet been
detected and makes possible theconfiscation of the article, or who by
voluntarily disclosing their knowledge
contributes to the detection of the offence
or of another’s contribution to the offenceof (such alleviation, under certain

318

preconditions, ranging up to waiving
punishment) and to offer them an incentive
to withdraw or to file a report by virtue ofsuch regulations.
A problem that has been much discussed
recently is the question of whether
members of legal, tax and economic
consulting professions (lawyers, notaries,
tax auditors, auditors) should be able tofulfil the element of the offence of money
laundering or whether, in the interest of
the administration of justice, precedence
is given to the highly-protected relationshipof trust with their clients, especially since,at least according to academic studies thathave been implemented in Germany, there
are no indications in this respect of criminal
policy activity being needed. I will be
coming back to this question in the context
of the EU directive.
As I have mentioned, there is a need fora series of non-criminal law measures in
addition to criminal law measures. They
pursue the aim of, firstly, preventing thecommission of criminal offences of money
laundering and, secondly, providing thecriminal prosecution authorities with ameans of suppressing money laundering:
What is needed for this purpose is tocreate a traceable “papertrail” to enable one
to identify the join between the illegal andlegal markets, thus enabling the criminal
prosecution organs to reconstruct thefinancial flows and to access the centres ofthe organisations.
Firstly, therefore, financial institutions
and other enterprises (e.g. financial service
institutions, casinos, people in commerce,
persons managing third party funds for afee) must be obliged, when opening
accounts and managing cash transactions
greater than a certain amount, to require
their clients to identify themselves, torecord the individual transactions and to117TH INTERNATIONAL SEMINAR
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make these records available to thecompetent authorities. Furthermore, theymust be obliged to inform the criminal
prosecution authorities when they havesuspicions and in cases of transactions
reaching a certain amount, and to interrupt
the transaction until the authorities havetaken a decision. Here, the interruption
period must be long enough to allow acheck, but also short enough not to place
the legitimate interests of the enterprise
at a disadvantage. Finally, special security
and verification measures must be imposedon enterprises that can be particularly
easily misused for the purposes of money
laundering.
All these duties need in turn to be
reinforced by means of criminal or at least
administrative law sanctions.
III. WHAT REQUIREMENTS FOR
NATIONAL CRIMINAL LAW
EMERGE FROM THE TOOLSAVAILABLE UNDERINTERNATIONAL LAW?
I have already mentioned the fact thatthe areas of organized crime and money
laundering are characterised byparticularly strong international
connections. Hence, it is appropriate inthese areas for particular emphasis to be
attached to drafting international legal
instruments and implementing them innational legislation and practice. All majorinternational and regional organisations
have addressed this material, and havedrafted tools that are worthy of note on the
one hand because of their quality, and on
the other because of their high degree ofagreement.
A. United Nations
The efforts to create an obligation underinternational law to criminalise money
laundering were launched by the United
Nations. It is a pleasant duty for me toremind you of this at an event organizedby an organisation belonging to the United
Nations family.
The Convention Against Illicit Traffic in
Narcotic Drugs and Psychotropic
Substances, accepted in Vienna on 20
December 1988, is concerned, as its namesuggests, only with the area of drug
offences. However, its Article 3 contains aduty to establish as criminal offences not
only the illicit trade in drugs (para 1 (a)),
but- correctly recognising that drugtrafficking, as well as organized crime
as a whole, would be largely bereft of its
economic basis if it were unable tolaunder its proceeds- in accordance with para 1 (b) also for- “the conversion or transfer of property,
knowing that such property is derived
from any (drug offence), for the
purpose of concealing or disguising
the illicit origin of the property or ofassisting any person who is involvedin the commission of such an offence
or offences to evade the legal
consequences of his actions” and- “the concealment or disguise of thetrue nature, source, location,
disposition, movement, rights withrespect to, or ownership of property,
knowing that such property is derived
from a (drug offence)”.
This definition, accepted after lengthy,
difficult negotiations, was intended, as I
will explain later, to become the “mother”
of all money laundering regulations draftedin the ensuing period in various
international fora; it hence demonstrates
a unique United Nations “success story”.
It is appropriate to the abovementioned
special significance attached to siphoning
off the proceeds of crime and theirsurrogates in this area that a whole,extensive Article of the Convention (Art.

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RESOURCE MATERIAL SERIES No. 585) is devoted to the “confiscation ofproceeds”. It places an obligation on theMember States to make this possible undernational law, and on request by a foreignstate. Art. 6 et seqq. of the Convention
contain obligations in the area of criminal
law cooperation (extradition, mutual legal
assistance, transfer of proceedings).
The “success story” of the United
Nations in the area of the suppression oforganized crime and money laundering
does not end with the drafting of thisConvention: The UN Convention against
Transnational Organized Crime (with two
Additional Protocols) was recently signed
in Palermo, on 12 December 2000 - basedon a Polish initiative - marking a further
milestone on the path towards world-wide
suppression of organized crime. Its areaof application covers, on the one hand, aseries of enumerated criminal offences,including money laundering, as well as all
criminal offences that are transnational by
nature and in respect of which a maximum
penalty of four or more years may be
imposed.
Article 6 of the Convention obliges thesignatory states to the criminalize “thelaundering of proceeds of crime”; it is basedon the fundamental structure of thecorresponding Article of the Drug
Convention, and contains in para 2 detailed
instructions on including a “widest rangeof predicate offences”.
Article 7 of the Convention also provides
for an obligation, outside criminal law, totake “measures to combat moneylaundering”, containing above all: a“comprehensive domestic regulatory andsupervisory regime for banks and non-bankfinancial institutions and, whereappropriate, other bodies particularly
susceptible to money-laundering ... inorder to deter and detect all forms ofmoney-laundering, which regime shall

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emphasize requirements for customer
identification, record-keeping and thereporting of suspicious transactions”.
In this Convention, too, the significanceof siphoning off the proceeds and theirsurrogates is stressed in that three Articles(12 - 14) are devoted to “Confiscation and
Seizure” - including international
cooperation in this area. Article 16 et seqq.
in turn contain regulations for criminal law
cooperation.
B. Council of Europe
For the European region, but also for
those states outside Europe that are able
to accede to the “open” Conventions of theCouncil of Europe, the work of the Councilof Europe in this area is as significant asthat of the United Nations. You will not, I
hope, therefore accuse me of“Eurocentrism” if I allot a similarly broadspan of attention to this field.
The Council of Europe Convention on
Laundering, Search, Seizure andConfiscation of the Proceeds from Crime
was opened for signature on 8 November
1990, following a Resolution adopted by the
15th Conference of the European Ministersof Justice (1986) stressing the need for “theformulation, in the light inter alia of thework of the United Nations, ofinternational norms and standards toguarantee effective international
cooperation between judicial (and, where
necessary police) authorities as regards thedetection, freezing and forfeiture of theproceeds of illicit drug trafficking. The
Convention, however, goes far beyond thismandate by facilitating international
cooperation with regard to all types ofcriminality, in particular those generatinglarge profits.
For that purpose, the Convention
provides a complete set of rules forinternational cooperation, including

117TH INTERNATIONAL SEMINAR
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securing evidence about instrumentalities
and proceeds, freezing of bank accounts,
seizure of property and similar provisional
measures, and executing foreign
confiscation orders.
The draftsmen of the Convention
recognised that, in order to render thesetools effective, the national substantive
penal law systems which could realisticallynot be fully harmonised had at least to be
put on an equal footing and that, inparticular, the successful fight against
serious criminality required theintroduction of a laundering offence instates which had not already introduced
such an offence. Article 6 of the Convention
obliges Parties to criminalize money
laundering under their domestic law. The
catalogue of offences listed in paragraph 1
is mainly based on the UN Drug
Convention of 1988. Paragraphs 2 and 3,
however, go beyond the UN Convention bymaking it clear that the Convention isintended to cover extraterritorial predicate
offences, and by also criminalizing
negligent and other behaviour. The rest of
the Convention mainly contains rules oninternational cooperation. A whole
Chapter (Articles 13 through 17) isdedicated to confiscation.
For the past two years, the Council ofEurope has been considering drawing up
an Additional Protocol to the 1990
Convention in order to adapt it to therapidly changing money launderingsituation. This Protocol could, inparticular:
(i)

(ii)

elaborate explicit provisions for
asset-sharing arrangements,
possibly also for exchanging
information concerning the assets
and lifting bank secrecy,
create a follow-up procedure
supplementing the Convention bymaking it subject to periodic

review and elaborating
recommendations to facilitate its
application and giving guidance toParties in disputes arising out of
its implementation,(iii) create a clear, institutionalised,legally-binding multilateralmechanism for enabling the
Financial Intelligence Units tocooperate with each other,(iv) lower the standard of proof inrespect of predicate offences,(v) overcome legal differences between
civil law-based forfeitures andcriminal law-based confiscations,(vi) limit the available grounds forrefusal by eliminating harmful tax
competition and restricting
exceptions, such as the fiscal
offence exception.
Whether, when and with what content
an additional protocol will be draftedcannot be forecast at present.
C. European Union
In contrast to Council of Europe
Conventions that create obligations only forthe states acceding to them, directives of
the European Union are binding on all EU
States; they must be transposed into
national law with no restrictions.
On 10 June 1991, the Council of theEuropean Union issued Directive 91/308/
EEC “on prevention of the use of thefinancial system for the purpose of money
laundering”. Its preamble starts by stating
that, when credit and financial institutions
are used to launder proceeds from criminal
activities, the soundness and stability of
the institution concerned and confidence
in the financial system as a whole could beseriously jeopardized, thereby losing thetrust of the public, and that therefore
coordinated measures at Community levelare necessary. As money laundering is
usually carried out in an international

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context, measures had to be adopted at aninternational level as well.
Article 2 of the Directive obliges Member
States to ensure that money laundering,as defined in Article 1, is prohibited.
Articles 3 through 12 concentrate on
preventive and administrative measures tobe taken by credit and financial
institutions. They must in particular:(i)require identification of theircustomers when entering intobusiness relations or conducting
transactions,(ii) keep for at least five years copies
or references of the identification
documents and the documents
relating to transactions,(iii) examine with special attention
certain suspicious transactions,(iv) make records of examinations
available to the competentauthorities,(v) report suspicious transactions notwithstanding banking secrecy,(vi) establish procedures of internal
control and training.
Article 12 of the Directive obliges
Member States to ensure that its provisions
are extended to other professions andcategories of undertakings that engage inactivities that are particularly likely to be
used for money-laundering purposes. In
order to fulfil this mandate, the Council
recently (November 2000) adopted a
Common position with a view to theadoption of a Directive amending the 1991
Directive.
The text approved by the Council is
intended, firstly, to expand the list ofpredicate offences to money laundering.
Secondly, the obligations from the 1991
directive are to be expanded to coverfurther financial institutions andprofessional groups. It is primarily
noticeable and politically disputed because322

it is intended not only to include real estateand precious metal agents and casino
operators, but also lawyers, notaries,
accounting experts and balance sheet
auditors. The Federal Government, which
had pleaded to remove the legal consulting
professions as a whole from the area of
application of the directive because of theabovementioned fundamental reservations- that is, concerning collision with therelationship of trust between a lawyer andhis/her client, was successful to a degree,in that it was possible to remove out-ofcourt legal advice (“ascertaining the legal
position of their client”) from the obligation
to report suspicion for legal and economic
consulting professions.
The “Common position” is now before theEuropean Parliament for a decision; itremains to be seen whether it will insist
on amendments being made to the text.
Other EU instruments related to money
laundering I will not treat in detail here
are the following:(i)

Second Protocol to the Convention
on the Protection of the European
Communities’ Financial Interests
dated 19.6.97(ii) Action Plan of the EU heads ofstate and government to combat
organized crime dated 15.8.97(exchange of information between
EU States)(iii) Joint Action dated 3.12.98, 98(699/
JI) and connected Framework
Decision (aiming in particular atreaching better and faster mutual
assistance in confiscation matters,
as well as advanced training of law
enforcement officials in the area ofconfiscation of proceeds of crime)(iv) Draft Framework Decision on
money laundering, etc.
(v) EU Mutual Assistance Convention

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D “G 7 / G 8” States’ Co-operation /“Financial Action Task Force on
Money Laundering” (FATF)
The “G 7” group of states deserve to beemphasised at this event because they forma link between the European region, fromwhich I come, and your region. In 1989 at
its Paris summit, it set up a Financial
Action Task Force on Money Laundering(FATF) that submitted a list of 40
recommendations in 1990. This list wasrevised in 1996; its update is currently
being examined.
The list is accompanied by usefulinterpretative notes, it may be regarded as
one of the most complete and distinct
inventories of repressive and preventive
items aiming at combating money
laundering, containing in particular:(i)legal measures in the field of
criminal law (criminalization,
extension of criminal liability,
confiscation, identification,
tracing, freezing and seizing, ofproceeds of crime, criminal
procedural law, banking secrecylaw),(ii) rules on the role of the financial
system, such as duties to customer
identification, keeping,
maintaining and making records
available to competent authorities,
paying attention to newtechnologies, applying increased
diligence in cases of complex,
unusual and suspicioustransactions, developing internal
policies and training programmes
against money laundering,(iii) measures to cope with the problem
of countries with insufficient antimoney laundering measures,(iv) other measures, such as detecting
or monitoring the physical crossborder transportation of cash etc.,(v) rules on the role of regulatory and(vi)other administrative authorities,
and last, but not least, the duty tobroaden, strengthen and simplify
international co-operation in theadministrative and criminal law
areas, displaying a detailed
catalogue of mutual assistancemeasures, starting from classicaltools like extradition and not
ending with modern andsophisticated ones like thoseaiming at avoiding conflicts ofjurisdiction and asset-sharing.

The establishment of Contact Points
between FATF states, via which a regularexchange of information is carried out, has
proven to be of particular value. By
evaluating a questionnaire campaign, acomprehensive compendium of the law andpractice of the individual states was drawn
up, providing a unique service topractitioners.
The G 7 summits in Birmingham andCologne appointed the FATF to address the
topic of “offshore centres / non-cooperative
jurisdictions”. Certain offshore areas(there are still more than 80 such oases)
are especially attractive to money
launderers and endanger the efforts of
those states that recognise and implement
the international standards, in some cases
hindering the world-wide suppression ofmoney laundering. Permit me to insert,
word-for-word, a quote from thecommuniqué of a G 7/G 8 summit (Moscow,
October 1999) in order to describe theproblem:“Jurisdictions with inadequate financial
regulation and supervision, as well as
excessive bank and corporate secrecy, playa significant role in laundering theproceeds of serious crime. A number ofjurisdictions are also characterized by theabsence of compulsory financial
supervision over the activity of banks and

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other providers of financial services, andby the absence of obligations on renderinginternational legal assistance in the seizure
and confiscation of the proceeds of illegal
origin. This allows criminal groups tocreate and make use of offshore financial
institutions, trusts, shell companies, andnominee accounts to hide the identity ofthe beneficial owners for the purpose oflaundering the proceeds of crime. These
practices should not be allowed tocontinue.”
In a first step, the FATF 25 draftedcharacteristics by which to identify noncooperative jurisdictions, and is currently
concerned with identifying suchjurisdictions, and where appropriate withenacting suitable sanctions against them.
IV. HOW AND HOW
SUCCESSFULLY HAS GERMANLAW IMPLEMENTED THE
INTERNATIONALREQUIREMENTS?
In 1992, the Federal Republic of
Germany inserted a separate element of
the criminal offence of money laundering(section 261 Criminal Code [StGB]) into its
Criminal Code, which has been expanded
several times since then (mainly in its listof predicate offences, which covers in
addition to all major crimes, a list of minor
crimes which have a special relation toorganized crime). As mentioned above,certain instruments under the General
Part of the Criminal Code are equallyimportant for combating money
laundering. Here, German law has created
new and more effective types of confiscation
measures.
For the non-criminal law area, in 1993
the Money Laundering Act(Geldwäeschegesetz - GWG) was adopted(and amended in 1998); in particular the
Act defines duties to require identification324

and report suspicion for financialtransactions by specific enterprises(bureaux de change were later included
here). The duty to require identification isconcerned with amounts from DM 30,000
upwards (previously DM 20,000). The
obligation to report suspicion can also apply
to smaller amounts.
In 1998, amongst other things securingsuspicious amounts of money in criminal
proceedings was made easier, and it was
ensured that financial authorities are
informed as early as possible of informationthat is of fiscal relevance. Furthermore,cash checks were carried out on crossing
borders.
In order to avoid repetitions, I would liketo refer in other respects to the general
information that I provided at the
beginning, in which in each case I took
German law as a basis, and from which you
can therefore obtain the gist of the German
provisions.
From 1994 to 1999, German police crime
statistics show an increase in the numberof cases investigated by the police inaccordance with section 261 of the Criminal
Code from 198 to 481 annually; inaccordance with the court criminal
prosecution statistics, 25 persons wereconvicted in 1998 because of violations ofsection 261 of the Criminal Code (cases are
not included here, however, in which a
sentence was also handed down in respectof an element of an offence for which ahigher punishment was imposable). Assets
were secured in 1999 worth roughly DM
50 million. Approximately the sameamount is accounted for by additional tax
revenue based on tax investigations incases related to money laundering.
These figures appear to bedisappointingly low in a country with 80
million inhabitants and a highly-developed

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economy, in a country in which according
to a plausible estimate the Italian Mafia
alone has invested DM 70 billion in Eastern
Germany in the ten years following
German Reunification. (In fact, the“Reunification criminality” has
unfortunately proved to be one of the mostimportant features of organized crime inGermany during the last ten years.) Thus,
the obvious conclusion to reach is that there
is a gross disproportion between thelegislative and practical effort and theefficiency of the measures.
On the other hand, we need to recognisethat weighing up effort and proceeds in thisarea is highly problematic because of thelarge number of measurement criteria andthe database, which of necessity is riddledwith gaps. This also applies to theevaluation of suspicion reports submitted
by the financial institutions: Whilst it istrue that suspicion only became concretein 7 % of cases regarding the element of
the criminal offence of money laundering,
it must be regarded as a success that links
with existing knowledge held by thecriminal prosecution authorities is revealedin 2/3 of all cases of suspicion that arereported, and that additional knowledge ofgroups of offenders, basic crimes andmoney laundering activities was obtained
and that in 1/4 of cases. Finally, it must be
pointed out once more that much of thesuccess of money laundering suppression
measures lies in the preventive area, andthat it hence cannot be quantified.
However, it is necessary at the same time
to admit that the efficiency of theregulations can still be improved. Since
one of the main problems is said to lie in
confirming suspicion and providing
evidence, a central file of suspicion reports
has now been created at the Federal
Criminal Police Office (BKA) in order togain information on structures spanningmore than one case. (The problem is rooted

in Germany’s federal structure, theconsequence of which is that suspicion
reports are accepted and evaluated not atFederal level, but at Land level.)
Since, as I have already mentioned
several times, in the set of legal tools forthe seizure of articles concerned withcrimes and of their proceeds is particularly
significant, efforts are being made in order
to increase efficiency here. Project groups
that have been formed at Land level, in
which specially-trained investigators
advise criminal prosecutors, have alreadyled to a considerable increase in theapplication of mechanisms for thesiphoning off of proceeds (just one
examples: the new Financial Investigation
Units in two of the 16 German Läenderalone have confiscated values of more than
50 millions of $ in 1998), this being fresh
proof of the theory that, sometimes,
thorough basic and further training of
persons acting is more effective thantightening the statutory provisions.
It is unlikely that Germany will be ablein future to avoid making amendments tothe legal provisions altogether. The
abovementioned amendments to theprovisions in the context of the European
Union could lead to a new need fortransposition - be it in the area of the listof predicate offences, or be it in the area of
the group of offenders addressed. However,other developments might also requirelegislative measures (it is only necessary
to offer as an example the increased use of
the Internet for economic transactions) - a
development that has already led to the
sceptic question by some authors whether,under the conditions of the new electronicage, the criminalization of money
laundering still makes sense at all.
Another smaller example: There could bea new need for action (but probably not for
Parliament) on the basis of new incentives
and opportunities to commit crimes in

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connection with the introduction of theEURO.
In any case, Parliament and theadministration should make efforts toavoid actionism, to restrict its
encroachment to a level of what is
absolutely indispensable, and also always
to include in the “cost-benefit analysis” theburdens imposed by the new regulations
on the non-criminal part of the populationand on the economy.
V. CLOSING WORDS - ON
INTERNATIONAL COOPERATION
I have already mentioned that, in lightof the material, primarily concerned as it
is with overcoming cross-border crime, thecreation of duties to criminalise and toharmonise or approximate substantive
criminal law or other law is only one sideof the coin of all international tools, eventhough it is an important one. These tools
are accompanied by provisions aiming at
optimising international cooperation,
which are at least equally important.
Here we find the greatest potential for
optimising the world-wide suppression ofmoney laundering: It is a matter ofapplying the classical tools of extraditionand legal assistance as broadly as possible,
i.e. especially in foregoing as far as possible
the lengthy, bureaucratic procedures andgrounds for refusal, which in some cases
still reflect ideas of sovereignty that belong
in the Middle Ages.
Above all, there is a need to implement
and apply the new legal assistance tools
for the cross-border “searching, seizing,
freezing and confiscating of assets” thathave been developed over the past few
years - especially by the new Conventions
that I have presented. Until these tools
have found their way into the legislationof all states and have been internalised by326

the practitioners who must apply them, thebitter motto with which the author once
described the suppression of international
crime will remain valid: The criminals aretravelling in supersonic aircraft, whilst thecriminal prosecution organs are chasing
them in a post coach and have to stop at
each national border. I would like to ask
all of you to contribute in your own
workplaces and by your own efforts to soon
making this situation truly a thing of thepast.