trigeko ¦ Study on Transnational ML Flows: Is Germany an Attractive Destination?

Transnational Money-Laundering Flows Involving Germany – Key Findings and Policy Implications

This study provides the first systematic analysis of transnational money laundering flows to and from Germany using suspicious transaction reports the German Financial Intelligence Unit (FIU) forwarded to law enforcement between 2020 and 2024. Only reports judged sufficiently substantiated to warrant referral were included. The dataset covers roughly 2.29 million suspicious transactions with an approximated conservative aggregate value of about €2.55 billion (median-based approximation). That median approach intentionally understates extreme values and therefore gives a conservative lower‑bound estimate for economic impact. The analysis examines both counts and volumes of transactions, their geographic distribution, and statistical relationships between flows and country characteristics – the so‑called push and pull factors that make certain origins and destinations more prominent in illicit financial flows.

Main descriptive patterns – more inflows than outflows; Europe by count, Asia by value

A striking result is that suspicious transaction volumes entering Germany are substantially larger than volumes leaving Germany. Across 2020–2024, domestic (purely within Germany) reports dominate by count and volume, but among cross‑border flows the volume of incoming suspicious transactions (to Germany) is nearly three times the volume of outgoing suspicious transactions (from Germany). This supports the conclusion that Germany’s large, stable and reputable financial market functions as an attractive destination – a “safe haven” – for capital, which can include illicit funds.

By transaction count, Europe dominates both as origin and destination, far ahead of Asia. By transaction volume, however, the picture changes: Asia leads among origin regions, supplying the largest share of suspicious value, while Europe remains the primary destination by volume but with a smaller margin. Country‑level concentration is notable: a small group of states accounts for large shares of volumes. Top origin countries by volume include Russia, China and Kyrgyzstan; top destination countries include Estonia, China and Lithuania. When counts are considered rather than volumes, smaller EU financial centers such as Lithuania, the Netherlands and Malta feature more prominently, indicating many smaller‑value transfers routed through those jurisdictions.

Bastian Schwind-Wagner _Follow

"Germany’s role as a major, stable financial market makes it an attractive destination for suspicious cross‑border transactions, with incoming volumes noticeably higher than outgoing flows. Targeted measures that focus on countries and intermediary jurisdictions identified in the study will help prioritise enforcement and compliance resources more effectively.

Improved international cooperation, timely information sharing between FIUs and tailored typologies that incorporate diaspora and proximity indicators are essential to detect and disrupt evolving laundering corridors. Continued data integration and refined volume measures will strengthen the evidence base for policy actions and operational responses."

Key drivers – economic mass, proximity, diaspora, offshore jurisdictions

The regression analysis uses a gravity‑style model to explain the number and volume of suspicious transactions between Germany and partner countries.

The results identify a consistent set of push and pull factors:

• Economic size matters strongly. Higher GDP of a partner country is associated with more suspicious transactions both into and out of Germany and with higher suspicious volumes. This mirrors the gravity intuition: larger economies generate and attract more financial flows in general – including suspicious ones.
• Geographic proximity and institutional closeness facilitate flows. Greater physical distance reduces flows, particularly outflows from Germany. Shared borders and membership in the Eurozone materially increase reported transaction counts and – for inflows – volumes. This reflects easier, lower‑cost transactional links and established financial corridors within nearby jurisdictions.
• Diaspora networks matter. Larger migrant communities from a given country resident in Germany are associated with higher counts and volumes of suspicious transactions in both directions, consistent with established reliance on personal networks to route funds.
• Offshore and secrecy jurisdictions are central. Countries flagged as tax‑haven/secrecy jurisdictions show very strong positive associations with both incoming and outgoing suspicious flows – for volumes the estimated multipliers are particularly large. This suggests that such jurisdictions serve both as destinations and as transit nodes in concealment chains and that funds often move between secrecy jurisdictions and regulated markets.
• Former Soviet states stand out. Countries of the former Soviet Union are associated with much larger inflows to Germany (both counts and volumes), even controlling for other variables. The Baltic states in particular appear as important nodes by transaction count and normed measures, while increases in Central Asian states since 2022 (notably Kyrgyzstan and Kazakhstan) are visible in volume trends.
• Institutional safeguards reduce some outflows. Membership in the Financial Action Task Force (FATF) is associated with lower reported outflow volumes, suggesting FATF membership and attendant standards may curb observable suspicious outbound flows.

Complex effects – conflict, corruption and macro dynamics

Variables measuring conflict and corruption produce mixed results. Internal conflicts without outside intervention are associated with larger outflows from Germany, while between‑state conflicts tend to reduce outflows – plausibly because sanction regimes, countermeasures and risk of asset seizure discourage transfers into belligerent states. Corruption perception measures do not show a clear, robust effect on inflows to Germany in these data; one interpretation is that highly corrupt countries may launder assets domestically or through particular intermediaries not captured in these referrals. Macroeconomic indicators such as inflation and GDP per capita show limited or no consistent direct effects once other variables are controlled for, though faster GDP per‑capita growth in a destination correlates with somewhat larger outgoing volumes.

Temporal patterns since 2022 – displacement and re‑routing

A time‑sliced examination highlights changes since Russia’s full‑scale invasion of Ukraine in early 2022. Reported suspicious volumes from Russia into Germany fell markedly in 2023 and 2024 compared with 2021, while flows from other former Soviet states increased substantially. This suggests partial displacement or re‑routing of flows away from Russia into other post-Soviet jurisdictions, and larger reported volumes from Central Asian partners (Kyrgyzstan, Kazakhstan) after 2022. Baltic countries continue to show prominent transactional density by count and – in many cases – by volume, reflecting their historic role as important intermediaries in post‑Soviet financial circuits.

Interpretation caveats – what forwarded FIU referrals represent

These findings are based on the subset of suspicious reports that the FIU forwarded to law enforcement – a “forwarded‑case” or “referral” dataset. That makes the sample conservative and richer in credibility signals than raw incoming reports, but it is still a filtered view of the true universe of money laundering activity. Successful laundering that leaves no suspicious traces remains invisible, and reporting and referral practices (including delays) can change over time. The dataset excludes reports filed in calendar years 2020–2024 that were only forwarded after the FIU’s cut‑off dates; therefore some temporal comparisons, notably for 2024, may be affected by reporting and processing lags. The median‑based volume approximation intentionally understates the influence of outlying high‑value transfers and therefore should be read as a lower‑bound lens on economic scale.

Practical implications for policy and compliance

The study’s results point to several actionable takeaways:

• Risk‑focused international prioritization. Authorities should concentrate preventive and investigative resources on the countries and regions identified as posing higher relative risk by volume and by network centrality – not only obvious large origins like China and Russia, but also jurisdictional intermediaries and smaller EU financial centers that appear as hubs by count and per‑capita measures.
• Enhance scrutiny around secrecy jurisdictions. The strong statistical association between tax‑haven/secrecy designations and suspicious flows reinforces the need for intensified supervisory attention to transactions interacting with these jurisdictions and for stronger transparency and beneficial‑ownership measures.
• Leverage diaspora and proximity signals in typology development. Compliance programs and FIU screening can incorporate diaspora network indicators and geographic proximity into risk scoring and red‑flag typologies, improving detection of lower‑value but high‑frequency abuse patterns such as mule networks and structured payments.
• Monitor dynamic re‑routing effects. Sanctions and geopolitical shocks change laundering tactics and corridors. The observed shift away from Russia toward other post-Soviet states after 2022 illustrates the need for flexible intelligence strategies and improved cross‑border cooperation with partner FIUs in Central Asia and the Baltics.
• Tailor measures to flow types. Many intra‑Eurozone transactions are numerous but relatively small in value, while large suspicious volumes often originate in Asia. Enforcement and compliance strategies should therefore differentiate between high‑frequency low‑value patterns and rarer high‑value transfers, using proportional investigative and supervisory responses.
• Strengthen international cooperation and information exchange. Given the transnational nature of laundering networks revealed here, more systematic, timely cross‑FIU information sharing and joint investigative mechanisms will be essential to trace multi‑jurisdictional concealment chains and asset destination networks.

Suggested next analytical steps

To deepen understanding and sharpen operational responses, future work should aim to:

• Incorporate improved volume measures that better capture high‑value outliers while preserving confidentiality protections, to quantify aggregate economic harm more precisely.
• Combine FIU referral data with other sources, including law‑enforcement outcomes, corporate registers, property transaction datasets and leaked datasets (carefully and lawfully used) to trace multi‑step layering and investment patterns.
• Expand comparative studies using equivalent FIU‑forwarded datasets from other financial centers to benchmark Germany’s role relative to peers and to map transit‑hub relationships across jurisdictions.
• Explore richer models of intermediaries and correspondent banking links, and add secrecy indices where coverage permits, to isolate intermediary roles from origin/destination effects.

Conclusion

The evidence assembled from FIU‑forwarded suspicious transaction reports for 2020–2024 paints a clear picture: Germany receives substantially larger suspicious inflows by volume than it sends out, reflecting its role as a major, stable financial market attractive to capital, including illicit funds. Economic size, geographic and institutional proximity, diaspora networks and the involvement of secrecy jurisdictions are robust determinants of where suspicious flows originate and terminate. The post‑2022 pattern of displacement away from Russia toward other post-Soviet states further demonstrates how geopolitical shocks reshape laundering corridors. Policymakers and regulated entities can use these insights to focus preventive, supervisory and investigative resources where the empirical risk is highest and to adapt quickly to evolving cross‑border laundering tactics.

Dive deeper

• trigeko ¦ Studie zu transnationalen Geldwäscheströmen: Deutschland ein attraktives Zielland? ¦ Link