Authorities voice opposition to cryptocurrency-based money laundering.

In recent years, the use of cryptocurrencies has become a topic of interest for German authorities, particularly in relation to money laundering and the funding of terrorism.

The Federal Government has reported an increase in the use of cryptocurrencies for such illicit activities, but the specific cryptocurrencies and crypto-service providers involved remain unclear. The Central Office for Financial Transactions Analysis (FIU) has received an increasing number of reports related to suspicious transactions involving cryptocurrencies, with around 570 reports in 2018, 760 in 2019, and approximately 2,050 in 2020.

Politician Frank Schäffler does not believe that the increased reporting numbers automatically indicate more crime. Instead, he attributes the rise to established institutions, such as banks and financial institutions, reporting suspicions more consistently. Schäffler, who is critical of the pseudo-anonymity of Bitcoin, urges the building up of expertise and investment for tracing the path of dirty business. He also suggests that the federal government should increase efforts to pursue illegal activities related to cryptocurrencies.

The Financial Supervisory Authority Bafin has dedicated resources to the issue, with 23.5 full-time equivalents from more than 35 units working on cryptocurrencies. The FIU's "strategic analysis" department is currently working with an average of 34.2 full-time employees on the issue of cryptocurrencies.

The Stuttgart Stock Exchange has joined the fray, introducing a crypto trading app. Meanwhile, Berlin-based neobank Nuri has established itself as a Bitcoin bank.

Despite the efforts of German authorities, the Federal Criminal Police Office does not have data on the use of cryptocurrencies for money laundering or terror financing. The FIU also does not have information on the volumes behind the reports it receives. The lack of concrete data makes it difficult to fully understand the extent of the problem and to develop effective strategies for combating it.

However, the increase in reports from blockchain analysis providers suggests that the use of cryptocurrencies for money laundering is likely. Schäffler's call for increased efforts to pursue illegal activities related to cryptocurrencies may signal a growing recognition of the need for action in this area.