As one of the world’s largest economies, Germany is an attractive target for money launderers. That is why even more effective money laundering prevention is one of the ten strategic medium-term objectives BaFin set for itself for the period from 2022 to 2025. Companies in the financial sector have already made clear progress here, but there is still some way to go.

At this year’s symposium on "Combating money laundering and terrorist financing", we discussed three areas in which we see a need for improvement.

1. Ensuring effective risk management

Effective risk management is vital for the prevention of money laundering and terrorist financing. Companies must precisely analyse and assess the risks associated with their customers, products and transactions. And they must establish suitable internal security measures on the basis of their individual risk analyses. For group companies, a comprehensive risk analysis must be carried out for the whole group. Only risks that have been identified can be mitigated.

2. Keeping an eye on outsourcing

The same applies to outsourcing arrangements. Companies must not allow the risks such arrangements bring to fall “out of sight, out of mind”. When companies outsource tasks relating to the prevention of money laundering and terrorist financing, they do not hand over responsibility for these tasks. On the contrary, they must ensure that the tasks they outsource are carried out properly. It can be helpful to visit the service provider on-site and review how they carry out the outsourced activities, for example.

3. Making innovation more secure

Modular business models can impede the prevention of money laundering and terrorist financing. Companies must therefore carefully analyse and mitigate the risks arising from such business models. This includes the use of minimum standards for partner companies and, in the case of IT-based customer onboarding processes, collecting additional data to close any information gaps.