German authorities have filed at least 2,500 charges in response to suspected financial crimes tied to the novel coronavirus pandemic since March 25, when federal lawmakers approved an unprecedented €1.1 trillion relief package to mitigate the economic impacts of the disease.
Separately, out of the more than 17,000 total suspicious transaction reports received by the German financial intelligence unit, or FIU, in the two months since the package’s approval, one in five flagged potential fraud, according to transcripts of a June 2 parliamentary debate published by Heute in Bundestag, the news service of the country’s legislative branch.
“This is a small number compared to the overall program but I think that there is a lot of unrecorded cases,” Holger Pauco-Dirscherl, a consultant with Transcendent Group in Frankfurt told ACAMS moneylaundering.com.
The assistance program includes loans, tax exemptions and subsidies for firms of all sizes, and specifically sets aside €50 billion of subsidies for small businesses, contractors, agricultural workers and the self-employed.
Businesses with up to five employees can receive a maximum of €9,000 in assistance through the plan while firms with six to 10 employees qualify for as much as €15,000.
Self-employed individuals and small businesses often undergo less supervision and have fewer requirements to disclose their owners and report their financial results, making them an ideal vehicle for fraudsters to bilk millions of euros from the government.
Thefts from the program did not take long to emerge.
On April 9, two weeks from the program’s launch, aid-related fraud prompted North Rhine-Westphalia, the most populous of Germany’s 16 states, to temporarily suspend COVID-19-related assistance after scammers cloned the program’s official website and used those copies to harvest private data from struggling entrepreneurs and claim financial aid with their identities.
Preliminary investigations in 52 of the more than 2,000 cases opened in response to suspected fraud schemes have found that the beneficiaries swiftly transferred the funds they received abroad, including to the United Kingdom, France, Belgium, Austria, Switzerland and the Netherlands.
Federal authorities told lawmakers in the June 2 hearing that German states tasked with vetting applicants, cross-checking their documents against government databases and disbursing funds from the program had also agreed to conduct random audits of small businesses that trigger suspicion and share their findings.
Those measures and guidance in which Germany’s FIU lists the most common red flags of subsidy fraud have largely failed to address the program’s vulnerabilities, Pauco-Dirscherl said.
“The program was pumped into the market with high speed, but limited, if any, due diligence,” he said. “Due diligence is now performed retrospectively and we are seeing a growing number of SARs [suspicious activity reports] and cases opened by prosecutors.”
Pandemic-related financial assistance in other EU nations has encountered similar hurdles. Hennie Verbeek-Kusters, head of the Dutch FIU, warned about the heightened prospects for financial crime during the pandemic in an interview with moneylaundering.com in April.
Contact Gabriel Vedrenne at email@example.com
|Topics :||Anti-money laundering , Fraud|
|Document Date:||June 23, 2020|