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German banks urge Cypriots to transfer money – Is Berlin collecting the money fleeing the European South?

It comes as many suspected: German banks try to take advantage of the economic crisis in the European  South. A Cypriot received an e-mail by a German Advisory Bureau offering him the opportunity to move his deposits to German banks with an interest rate of 3.0-4.0% for deposits over 50,000 euro. The offer refers to minimum deposits of 30,000 euro.

German bank Cypriot deposits

“The given situation by the Cyprus government as we see it ia a shhame against the citizens. You have the opportunity to “take fast action and secure your deposits” the bureau underlined.

The angry Cypriot called local Sigma Live broadcast and also sent the journalists the e-mail per fax. Sigma Live reported that also other Cypriots have been indirectly approached by German banks and call the prosecutor to take action, saying that this apporach should make the Cypriot government wonder about the motives of Eurogroup decision taken under Germany’s pressure.

“While it would be a stretch perhaps to wonder if the plan all along was to strengthen German banks, it is of little doubt that depositors will be quick to move any and every bill of Euros in their bank accounts as soon as their government allows,” commented zerohedge.

No, maybe they won’t escape the one-time levy, but they maybe escape future ones…

Germany a safe heaven for money laundering

This German bank approach came short after a friend called me telling me that the German banks are taking advantage from the crisis in the South.

“Germans have relaxed the money laundering laws, they do not take it so seriously anymore when it comes to accept money transfers from abroad,” my friend told me, citing a … source.

Odd enough, the same day, state Deutsche Welle published a report with the title “Germany, a safe haven for money laundering”

Money laundering as an organized crime is increasingly becoming a problem in Germany, says a new report by the Federal Criminal Police Office (BKA). But fighting money launderers has proven to be difficult.

About 13,000 cases of suspected money laundering were reported last year; in half of the cases, authorities later confirmed their initial suspicions.

That’s a record high since 1993, when Germany’s Anti-Money Laundering Act came into effect. From then on, banks had to report large transactions to the Federal Financial Supervisory Authority (BaFin).

According to the BKA’s report, transactions from Italy, Russia, Ukraine and Belarus caught the investigators’ attention. In addition to real estate agents, restaurant and amusement arcade owners, it appears to have also become common among individuals, to allow criminals to use their bank accounts for money laundering purposes.

“Unfortunately, circumstances in Germany still encourage money laundering,” said Gerhard Schick, a member of the Green Party in the German Bundestag.

According to experts of the Organization for Economic Cooperation and Development (OECD) and the European Commission in Brussels  have repeatedly accused Germany of not doing enough to counter money laundering.

Annually, about 50 to 60 billion euros ($65 billion to $78 billion) that stem from illegal activities such as blackmailing, drug or arms trading are whitewashed through legal businesses, estimates the trade union representing German police investigators.

The European Commission has already launched an infringement procedure because of Germany’s hesitant behavior; its main argument being that non- pursuit of money laundering would enable the funding of terroristic activities. According to figures issued by the OECD’s Financial Action Task Force (FATF), other countries do investigate more thoroughly and detect crimes four to 20 times more frequently than German authorities do.

Tricks & Tricks

One trick is to manipulate slot machines so that they display fewer profits, another is to offer illegal gambling online; estimated turnover: 120 million euros ($155 million) per year.

A third is to legalize dirty money by running it past insolvency proceedings. Lately, it’s not only commodities that are exchanged, but services between larger networks of companies which are difficult to control.

Even the trade of CO2 emission certificates is now being used as a means for money laundering.

Yet another problem arises when illegally acquired money is transfered to non-involved third parties to circumvent confiscation.

According to a study published by the Tax Justice Network that examined 70 countries, Germany is one of the biggest havens for tax evasion – ranking even before Switzerland, the Cayman Islands, Luxembourg or Jersey. (Full story Deutsche Welle)

The tricks of money launderers is the one thing. The other is the role of the banks and money insitutitions, and of the authorities that let it happen.

It takes two to tango, right?

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