The Financial Intelligence Unit's (FIU) Annual Report shows that in the period March to December 2020, around 11,200 suspicious activity reports (SARs) were filed in relation to Covid-19 emergency assistance wrongly paid by obliged parties. Of these, the FIU identified around 9,500 reports as attempted fraud.
This development was foreseeable as the Covid-19 emergency assistance could be applied for at short notice and in a relatively uncomplicated manner by German standards and is not subject to repayment. Thus, it could be assumed that established typologies such as the use of so-called straw men would also be used to illegally obtain Covid-19 emergency assistance.
It is equally unsurprising that, as can be seen from the annual report, the circle of participants is not limited exclusively to straw men, companies that had already been insolvent or in liquidation, but also includes companies that had not suffered any pandemic-related losses. Applications also came from private individuals who had not registered a business or from welfare recipients used by third parties. This phenomenon also exists in connection with activities as a financial agent and may be assumed to be known.
For the FIU Annual Report 2021, it will be exciting to see whether cases will be addressed in which, for example, politically exposed persons (PEP) wanted to draw financial benefits from the pandemic - such as the cases of the CDU politicians Niklas Löbel or Georg Nüßlein, who are said to have received high commissions from mask transactions.
The FIU's case presentation on trade-based money laundering (TBML; see also separate blog article on this) in the context of Covid-19 is also noteworthy. It clearly shows obliged parties, using a concrete example, that fraudulent acts do not involve cases with amounts between 3,000 and 25,000 euros only. In connection with the import of respiratory protection masks from Asia, a credit institution stopped a suspicious payment of 1.6 million euros before it was transferred abroad and reported it to the FIU. This case impressively shows that the implemented measures for the purpose of money laundering prevention seem to have had their effect in this institution.
It should also not be forgotten that, at times, the disbursements were stopped due to a large number of false applications, which at least in North Rhine-Westphalia may have led to a higher sensitivity in the context of the approval. However, it is no longer possible to determine how many cases of damage were prevented. At this point in time, the German Association of Judges speaks of more than 20,000 cases in connection with emergency assistance fraud and other pandemic-related offences.
Source: FAZ
It can be assumed that the number will continue to rise in the coming months and years. We will also have to expect more spectacular cases and irregularities in connection with Covid-19 in the future. This is shown by the cases of suspected billing fraud in rapid tests, which are assuming ever greater proportions and continue to be the focus of investigating authorities.
Source: ZEIT
What is striking here is that the investigating authorities were apparently only made aware by the media that the number of reimbursements applied for was not in line with the number of rapid tests actually carried out. It is thanks to the research activities of the media that these cases have come to the attention of the general public.
It would be welcome if the FIU, in its Annual Report for 2021, not only communicated the number of SARs in connection with Covid-19, but also presented how many unjustly flowed funds were seized by the investigating authorities. In this way, it could provide the obliged parties with feedback that their efforts were crowned with success, because the mere number unfortunately does not allow any conclusions to be drawn about the seized volume.
