Section 261 of the German Criminal Code (“GCC”) sets out the elements and sanctions of the crime of money laundering.
1. Prerequisites of the crime of money laundering
In summary, a person is criminally liable pursuant to Section 261 GCC if it:
(i) hides an asset derived from a crime;
(ii) transfers with the intent to conceal an asset derived from a crime;
(iii) takes possession of or brings another person into possession of an asset derived from a crime; or
(iv) takes into custody an asset derived from a crime.
A person is also criminally liable for money laundering if he or she conceals facts that may be relevant to finding, seizing or determining the origin of an asset derived from a crime.
The “asset derived from the crime” may be any object of pecuniary value, including cash, account balances, securities, patents, movable and immovable property, rights in rem, shares in companies, and receivables. Furthermore, any assets subsequently acquired with the proceeds from a crime qualify as assets derived from the crime for purposes of money laundering. For example, a person commits money laundering if he or she hides a car in his or her garage knowing that the car was purchased with money that a thief received from the sale of a stolen diamond ring. The car – and any asset that later replaces the car, e.g., the money received once the car is resold – is tainted by the predicate crime and anyone who commits any of the punishable acts with respect to such successor asset commits money laundering.
The German legislature has recognized that this—potentially long—chain of tainted assets is a significant burden on the free circulation of goods and money and thus on the economy as a whole. It has thus introduced the rule that the crime of money laundering pursuant to options (iii) and (iv) above can no longer be committed with respect to a tainted asset once it has been acquired by a person who does not commit a crime when acquiring the asset. For example, if a purchaser acquires a stolen car without knowing that it is loot, then that purchaser does not commit a crime. Any further purchaser of the car does not commit money laundering, irrespective of whether the further purchaser knows of the origin of the car, except if the further purchaser acquires the car with the intent to hide it or conceal its origin (options (i) and (ii) above). Thus, the acquisition of the tainted asset by a good-faith purchaser has a limited, yet significant, whitewashing effect.
Money laundering requires intent or reckless neglect. There is no criminal liability for simple negligent money laundering. Intent under German law requires, at a minimum, that the offender deems it possible that the asset is derived from a crime and accepts that possibility. The level of detail that the offender has to know and accept with respect to the crime at the origin of the asset is currently still an unsettled question of law. There is consensus that the offender’s general idea that an asset may be derived from some crime is insufficient for a finding of intent. On the other hand, there is also consensus that the offender need not know the precise nature of the crime that yielded the asset or the person who committed it.
An offender is similarly liable for the crime of money laundering if the offender fails to realize that the asset is derived from a crime due to reckless neglect. Reckless neglect is similar to gross negligence. Reckless neglect exists, for example, where it is readily recognizable that an asset is derived from a crime but the offender does not realize that fact due to grave indifference or lack of attention.
2. Sanctions for the crime of money laundering
Money laundering carries a standard sentence of up to five years’ imprisonment or a monetary fine.
Aggravated cases of money laundering carry a higher sentence. As such, professionals subject to AMLA obligations, i.e., a person that the law requires to pay particular care to prevent money laundering, is subject to a sentence of three months’ to five years’ imprisonment. If money laundering is committed by a gang or by a person who continuously commits money laundering to generate a steady stream of income, the maximum sentence for each instance of money laundering increases to 10 years’ imprisonment.
The attempt to commit money laundering is just as punishable as the consummated crime. However, courts usually order a lesser sanction if the crime did not make it past the attempt stage.
Persons who notify the authorities of an act of money laundering or otherwise assist in the seizure of the tainted asset are exempt from punishment under certain circumstances.
3. Seizure of the asset and any fruits of the crime
The tainted asset as well as any fruits of the crime of money laundering are subject to seizure and confiscation. The statutory authorization to seize fruits of the crime is very far-reaching. For example, if an apartment building was purchased with money derived from drug smuggling, both the apartment building and any rent generated by renting out apartments to tenants are subject to seizure and confiscation. The asset and any fruits derived therefrom may be seized even if a conviction for the original crime (here, the drug smuggling) cannot be made, e.g., because the smuggler cannot be apprehended.
4. Statute of Limitations
The statute of limitations for money laundering is five years. In aggravated cases, the statute of limitations is 10 years. The passing of the statute of limitations does not exclude the seizure and confiscation of the tainted asset and its fruits.