Germany finance ministry probed over suspected obstruction of justice

Money laundering updates

Sign up to myFT Daily Digest to be the first to know about Money laundering news.

German prosecutors have raided the country’s finance ministry as part of an investigation into alleged obstruction of justice, in a move that could prove embarrassing for Olaf Scholz, the finance minister and frontrunner to succeed Angela Merkel as chancellor.

The raids on both the finance and justice ministries are part of an investigation that started in February last year into the Financial Intelligence Unit, a unit of German customs which is the government’s main anti-money laundering agency.

Prosecutors are looking into whether FIU employees failed to pass on warnings from banks about possible money laundering “to the tune of millions of euros” to law enforcement agencies, according to a spokesman cited in the German media.

Prosecutors had searched the FIU in July 2020 and secured documents that showed there was “extensive communication” between the FIU and the finance and justice ministries. The latest raids were designed to identify possible suspects.

The spokesman said their objective was to investigate “whether and to what extent the leadership and officials of the ministries as well as superior authorities were involved in FIU decisions”.

The raids come at a sensitive time in Germany — two weeks before national elections that will bring the curtain down on Merkel’s 16-year reign as chancellor. Scholz’s Social Democrats have built up a commanding poll lead in opinion polls.

The FIU, which is subordinate to the finance ministry, has long been in the crosshairs of opposition MPs over its role in the fall of Wirecard, Germany’s largest postwar corporate fraud.

During a parliamentary inquiry into Wirecard, MPs repeatedly asked why the FIU failed to pass on dozens of Wirecard-related suspicious activity reports to the German public prosecutor’s office.

Prosecutors opened the current investigation into FIU over a suspicious activity report issued by a bank in June 2018 concerning a transfer to Africa of more than €1m. The bank suspected that the money was being used to finance terrorism as well as arms and drugs trafficking.

“The FIU noted this report but didn’t pass it on to the German law enforcement agencies,” the spokesman for the public prosecutors said. As a result it had proved impossible to stop the payments.

In statements, the justice and finance ministries said they were fully co-operating with the authorities. The finance ministry stressed that the investigation was not directed against its employees.

Lisa Paus, finance spokeswoman for the opposition Greens, accused Scholz of “ruining the FIU”.

“The integrity of the fight against money laundering in Germany has been called into question and with it an important part of the fight against organised crime and terrorism,” she said.

Fabio De Masi, an MP for the hard-left Die Linke party, said the FIU was a “security risk for Germany”. “We need a financial police with forensic expertise . . . Germany is a gangster’s paradise,” he said.