Election fallout as German ministries raided in money laundering inquiry

Investigators are looking at warnings over suspect payments to Africa

Prosecutors raided two German government ministries on Thursday in a move that could be felt in the general election campaign to succeed Chancellor Angela Merkel.

The justice and finance ministries were raided as part of an investigation into Germany’s Financial Intelligence Unit (FIU), an arm of the finance ministry under Social Democrat chancellor candidate Olaf Scholz.

Investigators are looking at whether the FIU was told to ignore warnings from banks of suspect payments to Africa. The investigation is expected to bring political heat for Mr Scholz.

He is vice chancellor in Germany’s coalition government led by Ms Merkel, but not a member of her Christian Democrat party, and is standing to replace her in the September 26 election.

“This is a security risk for Germany. We need a financial police with criminal expertise. Germany is a paradise for criminals,” said opposition legislator Fabio De Masi.

Opinion polls suggest Mr Scholz has a good chance of becoming German chancellor. His party was in first place on 25 per cent in a poll released this week, while Armin Laschet, the Christian Democrat, had support from only 19 per cent of voters.

Mr Scholz has presented himself as the natural heir to Ms Merkel even though they are members of different parties. As the Christian Democrats slide in opinion polls Ms Merkel has also been trying to dismiss that effort.

The Finance Ministry said in a statement that it supported the investigation and noted that suspicion was not directed at the ministry's employees.

The investigation began after a number of complaints that the FIU had not acted on tips of money laundering allegations, totalling millions of euros in suspect transactions, including to Africa, between 2018 and 2020, a spokesman for the public prosecutors sad.

He said they had searched the ministries to see whether the agency had been told to ignore the suspect money flows.

The prosecutors said they were also looking into the fact that since the FIU took over control of money laundering in 2017, reports of suspicious activity have dropped drastically.

They said that previous searches of the FIU had revealed that there had been extensive communication with the ministries that were searched on Thursday.

The FIU, and Germany's financial regulator, Bafin, have previously been criticised for failing to detect problems at payments company Wirecard, which collapsed in the country's biggest postwar fraud scandal.

Meanwhile, the country's anti-money laundering efforts are being reviewed by the Financial Action Task Force, a global body that assesses national measures to tackle financial crime.

Updated: September 9th 2021, 3:26 PM
EDITOR'S PICKS
NEWSLETTERS