Real estate, cryptocurrencies, gold: this is how dirty money is laundered

Germany is still considered a paradise for money launderers around the world. Criminals work with different tricks. An overview of the most common methods.

When the Berlin police took massive action against clans of Arab origin in the city last summer, the authorities subsequently confiscated 77 houses and properties. The value of the real estate alone was estimated at nine million euros.

The clan’s preference for concrete gold from the capital is unlikely to stem from the attractive price prospects on the housing market alone. It could also be due to a special circumstance when buying apartments and houses in Germany: Nobody is surprised to this day if the buyer pays a large part of the purchase price in cash.

Germany is still considered a paradise for money launderers around the world. It is true that the federal government has tightened the reporting requirements for money laundering prevention in recent years. But experts estimate that 50 to 100 billion euros from dark channels still flow past the tax every year.

Most of it does not come from organized crime circles, but from tax evaders.

But what are the tricks that are used? An overview of the most common methods.

property

The industry is particularly vulnerable to money laundering. The German real estate market is a playground for “serious criminals and corrupt”, complained the anti-corruption organization Transparency International last year. According to a study carried out for the Federal Ministry of Finance, criminals smuggled 20 to 30 billion euros in black money into the non-financial sector alone, i.e. past the banks.

The Federal Government is therefore now making “legal advisors” such as notaries and lawyers more responsible and demanding that they point out a potential suspicion of money laundering more strongly.

But that does not mean that all loopholes are closed. Money launderers can continue to purchase real estate through a property company through so-called share deals. It is sometimes difficult for the authorities to find out who is really behind the company addresses.

Cryptocurrencies

The verdict was as harsh as it was short. The head of the Bank for International Settlements (BIS), the central bank of the central banks, Augustin Carstens, recently said that Bitcoin is only good for two things: for speculating and for ransom payments.

Cryptocurrencies play a big role with criminals. In fact, the exchange of digital currencies is often largely anonymous – so cryptocoins enable illegal business outside of the regulated and supervised financial market.

Experts observe with concern that Bitcoin is therefore repeatedly at the center of digital crimes. With a new regulation, the federal government wants to put a stop to money laundering and terrorist financing with crypto currencies; An obligation to provide information for crypto transactions should take effect this year.

But the idea has weaknesses. In the case of transfers between two crypto value service providers – for example two crypto money custodians – the requirements cannot be technically implemented at the moment, according to the Bitkom industry association, as the technical standard for data exchange has so far been lacking.

gold

So-called over-the-counter shops, where cash is exchanged for coins or gold bars, are also a popular method of laundering illegal money. Because many investors appreciate the purchase of gold for cash, also known as anonymous over the counter business. Until a few years ago it was possible to buy the precious metal for cash without naming your name in a store up to a maximum of 9,999.99 euros. But the Federal Council put a stop to this in 2020.

Since January 1 of last year, retailers are obliged to identify the buyer for larger amounts. The cash limit, i.e. the limit for anonymous payments with cash, has been EUR 1,999.99 since then. In addition, gold dealers are instructed to check that a customer does not buy gold anonymously several times in a short period of time and thus bypass the 2,000 euro limit. However, control is difficult in practice.

Sham deals

Even the legendary criminal Al Capone used laundromats as addresses to hide his money flows. In order for a company to be interesting for money laundering, it needs a high flow of cash and a product whose turnover is difficult for the supervisors to control. That is why laundromats, amusement arcades or restaurants are particularly suitable for money laundering.

The black money is brought into the cycle there. The profits then end up in the account of a foreign bogus company, and after a few cross and cross transfers, the money is later returned to the recipient via detours – but then with a sender address that is perceived as serious.

After a long chain of transfers, it is difficult to prove where which funds really came from. It then often looks like the criminal has just made a very profitable investment.

Gambling casino

The gambling sector is also considered vulnerable. Theoretically, money launderers in casinos can change a chunk of cash into tokens and then have the rest paid out back into clean money. However, a few years ago a lawyer came to the conclusion that the risk of money laundering was very low.

For example, the players at the cash register in Germany would not receive a receipt and thus would not receive any proof that the money came from a legal source. So there is no advantage for the money launderer, judged lawyer Johannes Güldner. Payouts to an account are usually not possible in Germany.