Why Germany struggles to fight financial crime

White collar criminals and mafia organizations have it too easy in Germany, the German Association of Judges (DRB) has said, because there aren't enough prosecutors and judges to keep up with the case files.

"State governments are missing out on billions of euros because they are too fixated on the personnel costs of law enforcement," DRB Director Sven Rebehn told the Funke Media Group newspapers in late December. "Every additional euro spent on hiring more investigators to better combat financial and economic crime would ultimately flow back into the state coffers many times over."

Rebehn said that Germany was 2,000 state prosecutors short, and that there were around one million open cases still waiting to be investigated, effectively giving mafia organizations and financial embezzlers an easy time.

The notion that Germany is a financial crime "paradise"has been raised plenty of times, with observers noting that it has taken authorities a long time to wake up to the financial machinations of organized crime groups, while high-profile fraud cases like Wirecard and CumEx have cost the state billions.

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But Jacob Wende, a lawyer who specializes in financial law and CEO of Regpit, a financial crime protection company, said the problem was not just a lack of prosecutors — it was a lack of training across the board. "We're certainly a long way behind our possibilities," Wende told DW. "What we need is more and better-trained people in all areas: Whether it's among the state prosecutors, whether it's in the courts, whether it's in the regulating authorities."

This is particularly problematic, he added, because these crimes are, as Wende put it, "moving targets." "It's not like organized criminals use just one ploy — they keep adapting, they keep looking where the gaps are, and they will always be looking for ways to exploit those gaps."

The other problem is how fragmented law enforcement in Germany is, with a bewildering array of authorities across the country's 16 states tasked with dealing with different kinds of financial crime in different regions.

Kilian Wegner, professor of sustainable economic law at Halle University, said that in areas like gambling and precious metal trade there are over 300 regulatory authorities across the country, and many of them are understaffed. "It's very difficult to tell whether in one of those authorities there's a piece of information that would be relevant for a money-laundering investigation," Wegner told DW. "They all do their own thing, so there's a huge loss of information."

One woman who saw these problems up close was Anne Brorhilker, who, during her two decades as senior state prosecutor in Cologne, became famous for investigating the CumEx fraud scheme — through which banks and stock traders stole billions of euros from treasuries across Europe. Germany alone is thought to have lost around €30 billion ($35 billion).

The main problem Brorhilker saw was not too few prosecutors per se — it's that there are too few who actually do the prosecuting: "We have a lot of people who direct and administer, and not many who do the actual work," she told DW. "It's true that we don't have enough prosecutors who investigate and bring the cases to court, but we could just re-organize the personnel."

She also thinks that the structure of the judicial system encourages prosecutors to pursue easy cases that have a high success rate, like shoplifting, but that have little impact on society at large. "The criminals who are particularly professional and cause us as a society the most damage, they get away with it," she said.

In 2024, Brorhilker left the judiciary altogether to become one of the heads of the NGO Finanzwende, which seeks to change how the state fights financial crime and counter the power of financial lobbyists.

Lack of communication between agencies was a source of frustration for Brorhilker. "Let's say a man is caught at an airport with a lot of money in a bag," she said. "The customs officials on the ground look at it, and they might make a note of it for their superiors — but they usually don't pass on that information to the tax office or even to the police."

But while law enforcement agencies are all toiling separately, organized crimes, tax crimes and financial crimes are being perpetrated at the same time by the same people — often as part of the same criminal operation: While the police are trying to catch drug dealers, for example, the drug money is already being slipped past the tax authorities, and before those investigators have figured out what has happened, the money is already being laundered — so it is investigated by a completely different office.

Other countries organize this better — in Italy, for example, tax crime, customs crime, financial crime can all be dealt with by one authority.

Quantifying the extent of the damage caused by financial crime remains mainly guesswork. Rebehn estimated the amount of money being laundered in Germany at around €100 billion per year — but that figure, often cited in the German media, is based on a 2016 study from Halle University that extrapolated a number from known cases. The real amount has never been empirically researched.

Governments, meanwhile, routinely declare that they are determined to fight the problem. Chancellor Friedrich Merz's government announced last July that it would pay the states €240 million to hire 2,000 extra judges and prosecutors. But attempts at wholesale reform to streamline the system have proved tortuous, to the point of futility.

This became obvious when former Chancellor Olaf Scholz's government tried to establish a central anti-money-laundering agency. "Immediately a huge row broke out," said Wegner of Halle University. "Who should get this agency? The federal police, the customs investigation office, or the states, and if so who in the states? No one could decide where in this huge jigsaw puzzle this new piece should fit." In the end, the plan was abandoned.

The deeper problem with financial crime, according to Wegner, lies in the culture that reigns in much of Germany's judiciary: "There's no attraction in having a specialist career," Wegner said. "If you want to be promoted and get a better salary, you have to switch positions every few years — two or three years doing murder investigations, two or three years in a ministry, two or three years doing drug investigations. That's a typical career, because otherwise you're seen as too one-dimensional."

It's this rigid-thinking culture, according to Brorhilker, that is the key issue in the German judiciary — and that won't be changed by throwing more money and more staff at the problem.

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