With digitalisation and globalisation of all trade and financial activities, money laundering is becoming an increasingly important issue. The Organisation for Economic Co-operation and Development (OECD) and the European Union are intensifying their efforts to make it harder to „launder“ and funnel illegal funds, such as those from drug trafficking, into the legal financial system.

However, within the community of 27 member states, there is still no unified approach to fighting money laundering. For example, the upper limits for cash payments vary significantly. In Germany, it's a relatively high 10,000 euros, while in Italy, it had been 2,000 euros. However, the right-wing government under Prime Minister Giorgia Meloni raised this threshold to 5,000 euros, going against the international trend.

In this complex environment, Unicredit is bringing additional stress. The Italian bank's efforts to buy Commerzbank reveal the weaknesses in the entire anti-money laundering prevention and enforcement system within Banking Union. Should Unicredit successfully acquire Commerzbank, radical adjustments to the agencies responsible for money laundering would be necessary. Only this way could effective enforcement against this type of organised crime be ensured in the long term.

The responsibility for this lies with the member states of the EU and the Eurozone. If national legislators fail to establish the necessary framework, it undermines the structural foundation of the already complex Banking Union and its liability mechanisms, thereby weakening the rule of law within the EU. The newly created Anti Money Laundering Authority (Amla) for Europe is still in its infancy, and a long way off from being able to effectively counter money laundering.

Unicredit CEO Andrea Orcel's push, if successful, would also break new ground with regard to the money laundering issue. The first cross-border merger of two large banks within Banking Union would elevate the fight against money laundering to a new level. A bank from a southern European country with high national debt would soon dominate two of the three largest German commercial banks. With total assets of 1.5 trillion euros, Unicredit would be on par with Deutsche Bank.

However, the capacity of authorities across the board is far from sufficient to ensure sustained legal security and certainty in this area. In particular, Germany lacks sufficient technical and personnel resources to meet this growing challenge. Moreover, there is chaos with regard to responsibilities. The German virtue of thoroughness backfires here, as law enforcement agencies are structurally ill-equipped to handle these tasks. When it comes to supervising internationally active banks, which are especially under scrutiny, there are also overlapping responsibilities among authorities.

World-renowned criminologist Vincenzo Musacchio, a specialist in money laundering, notes that „money laundering is widespread in the banking and financial sector, and is difficult to detect because it increasingly operates across borders.“ He concludes that new technologies are needed to combat money laundering, and stricter sanctions are required.

Money laundering causes global damage estimated at about 3 trillion euros, which amounts to up to 7% of global GDP. More than 100 international banks with money flows exceeding 200 billion euros are involved. According to Musacchio, in addition to banks, sectors such as gastronomy, restaurants, real estate, used car sales, gambling, and cryptocurrency trading are also affected. Criminal organisations sometimes run their own banks, through which they channel illegally obtained funds into the legal financial system.

In the Corruption Perception Index (CPI) by Transparency International, Italy ranks 42nd out of 180 countries, while Germany ranks 7th. This confirms the widespread prejudices against Italy. The presence of criminal organisations such as the Sicilian Cosa Nostra, the Neapolitan Camorra, and the Calabrian 'Ndrangheta is a major reason why Italy, the EU’s third-largest economy, has been slower than Germany to take decisive action against money laundering and corruption.

The 1992 murders of two investigating judges, Giovanni Falcone and Paolo Borsellino, by the Mafia near Palermo accelerated a shift in thinking. But it took years for this to be reflected in newly established institutions. It wasn't until 2017 that Italy introduced a national anti-corruption plan.

Two years ago, the OECD acknowledged Italy's progress in combating corruption, but criticised the shortage of personnel in oversight, and a lag in digitalisation. On the national level, Italy's National Anti-Corruption Authority (ANAC), the Ministry of Economy and Finance, and the Bank of Italy, are responsible for fighting money laundering and corruption. A dedicated independent unit within the central bank monitors work processes, conducts analysis, oversight, and imposes sanctions. This unit has observed a significant increase in suspicious financial operations, particularly in the north of the country. In 2021, the number of reported suspicious cases rose by 23% to 139,524. In comparison, at that time Germany had exactly 14,785 cases, an increase of nearly a third. In 2023, the number rose to almost 33,000.

Germany is the second most important base for organised crime from the Mezzogiorno after Italy. The Mafia killings in Duisburg in 2007 finally awakened the German public and law enforcement. Until then, it was assumed that the Mafia was distant and only an Italian phenomenon.

In its most recent situation report, the German Federal Criminal Police Office (BKA) revealed a sharp decline in detected money laundering operations in Germany. The reasons for this are varied, including potential investigative successes by the BKA. However, it may also be due to restructuring within the authorities. Berlin removed the unit responsible for money laundering from the BKA and transferred it to customs, where it now operates as the Financial Intelligence Unit (FIU). But the FIU reportedly also suffers from a shortage of personnel in handling reported money laundering cases, including those from banks.

Meanwhile, the EU and the ECB are reorganising their approach to combating money laundering. Until Amla starts operating in 2025, the responsibility for handling money laundering issues lies with the respective national supervisory authority. For Unicredit, it is the Bank of Italy. For HVB, it is Germany's Federal Financial Supervisory Authority (BaFin). The Unicredit Group is also under the supervision of the ECB’s Single Supervisory Mechanism, which applies to institutions with total assets of 30 billion euros or more.

If Unicredit were to acquire Commerzbank, BaFin would continue overseeing the „yellow“ bank regarding money laundering. Unicredit claims to be actively committed to fighting financial crime, including risk management through continuous improvement of its anti-money laundering programme, and compliance initiatives aimed at promoting a risk management culture.

BaFin monitors whether financial service providers meet the structural requirements for preventing money laundering. The recent shortcomings observed at neobanks, which led to fines, raise doubts as to whether some institutions are even aware of the dangers and associated risks.