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German Public Prosecution Offices have launched many new criminal investigation proceedings into alleged violations of EU sanctions against Russia. In November 2024, the owner and managing director of a German engineering company was sentenced to seven years’ imprisonment for having supplied machines to produce sniper rifles to Russia. The comprehensive reporting obligation now stipulated in Council Regulation (EU) No. 833/2014 will likely lead to a further increase in sanctions-related enforcement proceedings.
The German Federal Financial Supervisory Authority (BaFin) appears to have ramped up its enforcement activities into alleged failures to submit voting rights notifications, resulting in fines against various individuals and companies.
Companies must be mindful of the issues around potential greenwashing. Several criminal investigation proceedings were launched regarding alleged fraud or capital investment fraud concerning, e.g., violations of reporting obligations related to environmental and climate impacts, or potentially false ESG statements in respect of financial products. The offices of a large asset management company were raided in connection with allegations of greenwashing.
German authorities continue to coordinate cross-border enforcement activities with foreign prosecution authorities. Mutual legal assistance possibilities are used widely, especially in the context of investigations into potential cross-border tax evasion. In addition, authorities continue to cooperate cross-border to combat cybercrime. In May 2024, the Federal Criminal Police Office (Bundeskriminalamt) reported that servers and domains of malware providers had been taken down in a joint operation with authorities from the Netherlands, France, the UK, the U.S. and other countries.
Law reforms – supply chains, corruption in public office and money laundering
The German Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz) became effective in January 2023 for a company with more than 3,000 employees. Since January 2024, the law also applies to a company with more than 1,000 employees. As a result, many additional companies are now in scope. Companies must comply with comprehensive due diligence requirements, which include risk assessment, third-party due diligence, and reporting obligations. Failure to comply can lead to fines of up to EUR8 million. For a company with an annual turnover of more than EUR400 million, these fines can amount to up to 2% of the corporate group’s average annual turnover.
There is a new criminal offense regarding the unlawful advocacy of interests by elected officials. The new offense is intended to close loopholes in criminal liability. It has been introduced in response to members of the German parliament (Bundestag) having accepted commissions amounting to millions of euros for brokering contracts between companies and the state in connection with the procurement of respiratory masks and other protective equipment during the COVID-19 pandemic. Previous prosecutions had resulted in acquittals because courts found the conduct was not covered by existing bribery offenses, which would have required that the politicians had acted in the exercise of their political mandate when brokering the agreements.
From January 2024, obliged entities under the German Money Laundering Act (Geldwäschegesetz) must now register with the electronic reporting portal goAML Web of the Financial Intelligence Unit (Zentralstelle für Finanztransaktionsuntersuchungen). The portal is used to submit suspicious activity reports. There are currently no consequences for a failure to register, but a new legislative proposal provides for a fine of up to EUR150,000 for non-compliance. However, due to the new election of the German parliament in early 2025, it is uncertain whether the current government plans to advance the legislative proposal still in the current term.
The draft of the Combatting Financial Crimes Act (Finanzkriminalitätsbekämpfungsgesetz) was pursued further in the legislative process in 2024. It was expected to come into force in 2025, but it is unclear whether the law will be passed before the election in February 2025. The law aims to strengthen the fight against money laundering and terrorist financing by implementing advanced technology and bundling competencies in a new Federal Financial Crime Agency (Bundesamt zur Bekämpfung der Finanzkriminalität). It provides for the establishment of a new Central Office for AML Supervision (Zentralstelle für Geldwäscheaufsicht) to supervise compliance with AML laws in the non-financial sector.
Increase in whistleblowing reports
The Whistleblower Protection Act (Hinweisgeberschutzgesetz) (the Act) came into force in July 2023. Since then, all companies with 50 or more employees, as well as companies operating in certain sectors, such as the financial services sector, have been required to implement an internal reporting office (interne Meldestelle).
The Act sets out requirements on how the whistleblowing system must be operated, including the processing of whistleblower reports. Companies should ensure their whistleblowing system complies with these requirements to avoid corporate administrative fines. Whistleblowers may report internally or to an external reporting office (externe Meldstelle) at the Federal Office of Justice (Bundesamt für Justiz) or a Public Prosecution Office. The Federal Office of Justice reported having received a large number of reports since the external reporting office assumed its operations.
Predictions for 2025
Companies operating in Germany should monitor and improve their tax compliance systems to avoid tax disputes which, in the current enforcement environment, regularly result in criminal investigations proceedings.
Compliance with EU sanctions, anti-money laundering, and counter-terrorism financing, as well as anti-bribery and anti-corruption laws, should also be high on the agenda of in-house legal teams. These areas are under particular scrutiny by German criminal prosecution authorities at this time and are likely to draw additional attention following the enactment of new laws as well as the planned establishment of new government agencies with enhanced powers and tools.
It will also be crucial for companies to appropriately manage environmental and supply chain risks in view of the pressure being exerted by non-governmental organizations on government investigations into these matters.
On the horizon – increased focus on AML, AI-washing and direct access to electronic data by investigating authorities
The EU and Germany are dedicated to countering financial crime and, in particular, money laundering more effectively. The EU has adopted a package of laws, which will take effect in mid-2027, to harmonize the rules to combat money laundering and bolster the toolbox to fight these offenses. The Anti-Money Laundering Authority will assume its operations in Frankfurt, Germany, on January 1, 2028. The combined effect of new laws and competencies will result in increased regulatory scrutiny in this field.
Companies should also familiarize themselves with the new EU E-Evidence Regulation, applicable from mid-2026, which gives criminal prosecution authorities the opportunity to obtain evidence directly from service providers in another EU Member State, regardless of the data storage location. These measures will largely replace the (often lengthy) mutual legal assistance procedures.
In the long term, we also expect investigations into "AI-washing," i.e., misleading claims about the use of AI in products or services. Companies should therefore ensure that their claims about the use of AI are correct and transparent to avoid legal risks.
Directory quotes
Dr. Wolf Bussian, Partner
- “pleasantly pragmatic,” competitor—JUVE Handbook of Commercial Law Firms 2024/2025
- frequently recommended—JUVE Handbook of Commercial Law Firms 2024/2025
- Ranked in Best Lawyers in Germany 2024 for corporate governance and compliance and conflict resolution—Best Lawyers in Germany/Handelsblatt, 2024
Jan Erik Windthorst, Partner
- “extremely clever,” competitor—JUVE Handbook of Commercial Law Firms 2024/2025
- frequently recommended—JUVE Handbook of Commercial Law Firms 2024/2025
- Ranked in Best Lawyers in Germany 2024 for conflict resolution—Best Lawyers in Germany/Handelsblatt, 2024
- “We really enjoyed being advised by him and greatly appreciate his expertise, experience and attention to both the smaller details and the bigger picture.”—Legal 500 EMEA 2024, Germany
Dr. Tim Mueller, Partner
- frequently recommended—JUVE Handbook of Commercial Law Firms 2024/2025
- “cooperative and competent, we are expecting great things from him,” competitor, criminal law—JUVE Handbook of Commercial Law Firms 2024/2025
- Names of the next generation—Legal 500 EMEA 2024, Germany, Investigations
- “A distinguished white-collar crime lawyer. The cooperation has been excellent. I would recommend him at any time and without hesitation.”—Legal 500 EMEA 2024, Germany, Investigations
Dr. David Schmid, Partner
- Ranked as “Ones to watch” in Best Lawyers in Germany 2024 for corporate governance and compliance.—Best Lawyers in Germany/Handelsblatt, 2024
- “often conducts cross-border investigations”—Legal 500 EMEA 2022, Germany, Investigations
- Listed as “Rising Star White Collar Crime”—Legal Media Expert Group 2022
Dr. Jasmin Hense, Senior Associate
- Ranked as “Ones to watch” in Best Lawyers in Germany 2024 for corporate governance and compliance.—Best Lawyers in Germany/Handelsblatt, 2024
This article is part of the A&O Shearman Cross-Border White-Collar Crime and Investigations Review. Please click here for our overviews and insights in other jurisdictions.
