All-Crimes Approach

All-Crimes Approach

The “all-crime approach” in the area of anti-money laundering represents a significant expansion of the legal framework, both at the European level through EU Directive 2018/1673 and within the German legal system through the new version of Section 261 of the German Criminal Code. This approach represents a paradigm shift in anti-money laundering activities by moving away from a selective catalog of predicate offenses and instead including all core and ancillary criminal offenses as potential predicate offenses for money laundering.

Original approach and its limitations

Before the implementation of the all-crime approach, Section 261 StGB old version (old version before March 18, 2021) limited the predicate offenses relevant to money laundering to a specific catalog. This mainly included crimes and certain offenses as defined in the Narcotics Act, tax law and various property and property crimes. The limitation to this catalog resulted in a certain degree of predictability and clarity in the application of the German Money Laundering Act, but also placed limits on the investigation and prosecution of money laundering activities, as numerous other potentially relevant criminal offenses were ignored.

Catalog of predicate offenses

Section 108e StGB: Bribery of members of parliament.
Section 332 StGB Paragraph 1: Bribery.
Section 332 StGB Paragraph 3: Bribery of public officials.
Section 334 StGB: Bribery and corruption in commercial transactions.
Section 335a StGB: Stricter punishment and reduction of punishment for bribery offenses.
Section 29 Paragraph 1 Sentence 1 No. 1 of the Narcotics Act: Crimes in connection with narcotics.
Section 19 Paragraph 1 No. 1 of the Basic Substances Monitoring Act: Criminal offenses in connection with precursors for narcotics.
Section 373 of the Tax Code: Commercial, violent and gang-based smuggling.
Section 374 Paragraph 2 of the Tax Code: Tax theft.
Section 12 Paragraph 1 of the Act on the Implementation of Common Market Organizations and Direct Payments: Regulations on the implementation of EU market organizations and direct payments.
Section 152a StGB: Treason in commercial enterprises.
Section 181a StGB: Pimping.
Section 232 StGB paragraphs 1 to 3 sentence 1: Human trafficking.
Section 232 StGB paragraph 4: Human trafficking.
Section 232a StGB paragraphs 1 and 2: Forced prostitution.
Section 232b StGB paragraphs 1 and 2: Forced marriage.
Section 233 StGB paragraphs 1 to 3: Exploitation using deprivation of liberty.
Section 233a StGB paragraphs 1 and 2: Exploitation of labor.
Section 242 StGB: Theft.
Section 246 StGB: Embezzlement.
Section 253 StGB: Blackmail.
Section 259 StGB: Receiving stolen property.
Section 263 StGB: Fraud.
Section 264 StGB: Subsidy fraud.
Section 265c StGB: Loan fraud.
Section 266 StGB: Infidelity.
Section 267 StGB: Forgery of documents.
Section 269 StGB: Falsification of technical records.
Section 271 StGB: Indirect false certification.
Section 284 StGB: Unauthorized organization of a game of chance.
Section 299 StGB: Corruption and bribery in commercial transactions.
Section 326 StGB Paragraph 1: Unauthorized handling of hazardous waste.
Section 326 StGB Paragraph 2: Unauthorized handling of hazardous waste.
Section 326 StGB Paragraph 4: Unauthorized handling of hazardous waste.
Section 328 StGB Paragraph 1: Unauthorized handling of nuclear fuel and other radioactive substances.
Section 328 StGB Paragraph 2: Unauthorized handling of nuclear fuel and other radioactive substances.
Section 328 StGB Paragraph 4: Unauthorized handling of nuclear fuel and other radioactive substances.
Section 348 StGB: Danger to prisoners and people who are held against their will.
Section 96 of the Residence Act: Prohibited entry and stay.
Section 84 of the Asylum Act: Induction into abusive asylum applications.
Section 370 of the Tax Code: Tax evasion.
Section 119 Paragraphs 1 to 4 of the Securities Trading Act: Criminal offenses in connection with securities trading.
Section 143 of the Trademark Act: Trademark infringement.
Section 143a of the Trademark Act: Violation of business names.
Section 144 of the Trademark Act: Trademark infringement.
Section 106 of the Copyright Act: Unauthorized use of copyrighted works.
Section 107 of the Copyright Act: Inadmissible use of the author’s attribution.
Section 108 of the Copyright Act: Unauthorized use of protected services.
Section 108a of the Copyright Act: Commercial unauthorized use.
Section 108b of the Copyright Act: Showing an unlawfully produced film work.
Section 25 of the Utility Model Act: Criminal offenses in connection with utility models.
Section 51 of the Design Act: Criminal offenses relating to registered designs.
Section 65 of the Design Act: Criminal offenses relating to unregistered community designs.
Section 142 of the Patent Act: Patent-related offenses.
Section 10 of the Semiconductor Protection Act: Criminal offenses in connection with the protection of semiconductor topographies.
Section 39 of the Plant Variety Protection Act: Criminal offenses in connection with plant variety protection.

EU Directive 2018/1673 and its implications

The EU Directive 2018/1673, adopted on October 23, 2018, aimed at harmonizing the anti-money laundering regulations in the EU. It recommended a broader approach to defining predicate offenses for money laundering, suggesting that all offenses punishable by a prison sentence of more than six months could be considered predicate offences. This expanded the scope of the predicate offenses significantly beyond the traditional scope.

Criminal activity

‘Criminal activity’ means any kind of criminal involvement in the commission of any offence punishable, in accordance with national law, by deprivation of liberty or a detention order for a maximum of more than one year or, as regards Member States that have a minimum threshold for offences in their legal systems, any offence punishable by deprivation of liberty or a detention order for a minimum of more than six months.

In any case, offences within the following categories are considered a criminal activity:

(a) participation in an organised criminal group and racketeering, including any offence set out in Framework Decision 2008/841/JHA;
(b) terrorism, including any offence set out in Directive (EU) 2017/541 of the European Parliament and of the Council;
(c) trafficking in human beings and migrant smuggling, including any offence set out in Directive 2011/36/EU of the European Parliament and of the Council and Council Framework Decision 2002/946/JHA;
(d) sexual exploitation, including any offence set out in Directive 2011/93/EU of the European Parliament and of the Council;
(e) illicit trafficking in narcotic drugs and psychotropic substances, including any offence set out in Council Framework Decision 2004/757/JHA;
(f) illicit arms trafficking;
(g) illicit trafficking in stolen goods and other goods;
(h) corruption, including any offence set out in the Convention on the fight against corruption involving officials of the European Communities or officials of Member States of the European Union and in Council Framework Decision 2003/568/JHA ;
(i) fraud, including any offence set out in Council Framework Decision 2001/413/JHA;
(j) counterfeiting of currency, including any offence set out in Directive 2014/62/EU of the European Parliament and of the Council;
(k) counterfeiting and piracy of products;
(l) environmental crime, including any offence set out in Directive 2008/99/EC of the European Parliament and of the Council or in Directive 2009/123/EC of the European Parliament and of the Council;
(m) murder, grievous bodily injury;
(n) kidnapping, illegal restraint and hostage-taking;
(o) robbery or theft;
(p) smuggling;
(q) tax crimes relating to direct and indirect taxes, as laid down in national law;
(r) extortion;
(s) forgery;
(t) piracy;
(u) insider trading and market manipulation, including any offence set out in Directive 2014/57/EU of the European Parliament and of the Council;
(v) cybercrime, including any offence set out in Directive 2013/40/EU of the European Parliament and of the Council.

Draft bill to improve criminal law enforcement against money laundering

The German draft law to improve the criminal law against money laundering took up the approach proposed by the EU directive and even went further by including all core and ancillary criminal offenses. This proposal aimed to strengthen the ability to combat money laundering in an increasingly integrated Europe and to make it more difficult for criminals to use advantages such as freedom of travel and movement of capital to inject illicit assets into the economic system.

Section 261 StGB new version (new version since March 18, 2021)

The new version of Section 261 StGB, which came into force on March 18, 2021, implemented the all-crime approach into German law. This change meant that any crime could now be considered a potential predicate offense for money laundering. In addition, a special privilege was introduced for criminal defense lawyers, according to which they are only liable to prosecution under Section 261 Paragraph 1 of the Criminal Code if they have certain knowledge of the criminal origin of the fee.

Impact of the all-crime approach

The all-crime approach leads to a significant expansion of the spectrum of possible predicate offenses for money laundering. This has far-reaching implications for law enforcement as investigators now have a broader base from which to pursue money laundering activities. At the same time, it increases the risk for actors in various professional fields, particularly in the financial and legal sectors, as transactions that were previously not considered suspicious can now potentially fall under suspicion of money laundering.

Criticism and challenges

Despite the advantages in effectively combating money laundering, there is also criticism of the all-crime approach. Some experts point to the potentially increased risk of over-criminalization and interference with lawful conduct towards commercial traffic. The requirement to check all transactions for possible links to any crime can result in significant bureaucratic burdens and increase the risk of misinterpretation and unwarranted investigations.

Conclusion

The all-crime approach represents a significant step in the fight against money laundering and reflects the desire to create more effective mechanisms against the integration of criminally acquired assets into the legal financial circuit. At the same time, this approach requires careful consideration in order to minimize the risk of over-regulation and disruption to legal business transactions.