German Finance Minister Seeks Enhanced Tools to Combat Illegal Work
The German Federal Ministry of Finance, led by Lars Klingbeil (SPD), is pushing forward with legislation to grant customs authorities greater access to law enforcement information systems in the ongoing fight against undeclared work. A draft law, as reported by the Funke Media Group, aims to modernize and digitize efforts to combat this issue.
According to the proposed law, the integration of relevant criminal and perpetrator information from various investigative bodies is crucial for effective investigations and identifying connections. Current procedures limit customs officials to written or telephone inquiries through existing administrative channels. The new legislation seeks to overcome these limitations by providing access to data from financial authorities and social welfare offices.
Beyond enhanced information sharing, the Ministry of Finance intends to strengthen the “Finanzkontrolle Schwarzarbeit” (Financial Control of Undeclared Work) by expanding its investigative powers. In certain cases, the authority to initiate legal proceedings could be delegated to customs officials by prosecutors. The government anticipates significant additional revenue for federal, state and social insurance budgets, projecting approximately €858 million in additional income by 2029. Social insurance providers are expected to particularly benefit from more efficient investigations, potentially easing the burden on state budgets by around €59 million annually, especially within the judicial system.
Klingbeil had previously announced more stringent measures against undeclared work, money laundering and financial crime earlier in June. While the previous governing coalition of SPD, Greens and FDP had also initiated similar legislative efforts, they were ultimately not implemented.
In 2024, investigations by the Financial Control of Undeclared Work uncovered a total damage of roughly €766 million. Customs authorities initiated 97,000 criminal and 50,000 administrative violation proceedings related to undeclared work and illegal employment in the same year. The draft law emphasizes that undeclared work results in a failure to pay taxes and social security contributions, ultimately harming the German economy and undermining trust in the rule of law. The proposed legislation is currently undergoing coordination with other ministries.
