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According to this article Germany requires the authorities to prove that some funds are illegal instead of asking the company or individual for that proof:

In Germany, the burden of proving that money comes from illegal sources rests on authorities, rather than on firms or individuals needing to document they are clean, as is the case in Italy.

Another key feature making Germany a magnet for Mafia investment is that only individuals, not companies, can be tried for criminal activities there.

I am wondering about the rationale of apparently making the life of authorities harder by having the law like this.

Question: In Germany, why does the burden of proof fall on authorities rather than the company or individual when it comes to possible illegal funds?

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    Presumption of innocence? You know, one of the pillars of justice? One of the human rights (en.wikipedia.org/wiki/Presumption_of_innocence)?
    – M i ech
    Dec 4, 2019 at 8:25
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    @Alexei that's not presumption of innocence. Presumption of innocence means that the authorities have to produce evidence that a crime has been committed. The Italian system where it is up to the individual to produce the evidence that they haven't committed a crime is precisely presumption of guilt.
    – PhillS
    Dec 4, 2019 at 8:38
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    I don't think this article is still current (it seems to be from 2014 and there have been some recent efforts in anti money laundering legislation. When a relative died three years ago and left me a few thousand euros I had to fill in a lot of paperwork to prove that him dying of old age was not part of an elaborate money laundering scheme. An individual receiving more than 10 000 Euro in a bank account seems to automatically trigger an alarm with the authorities, and doubtless there is a lot more new legislation that somebody with my limited funds would be not aware of).
    – Eike Pierstorff
    Dec 4, 2019 at 9:40
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    @ReinstateMonicaSackTheStaff We are way past the stage where that is possible if you think that presumption of innocence is part of liberty. In general almost all western states have abandoned that in favor of the wars on: drugs, money laundering, tax evasion and whatever other current flavor of the month.
    – DRF
    Dec 4, 2019 at 19:33
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    @PhillS If Italian law requires keeping accurate record of all money transactions for the purpose of proving their source, the crime would be the lack of record, not some hypothetical illegal source.
    – jpa
    Dec 5, 2019 at 7:48

5 Answers 5

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Because that's the normal way round for criminal standard of proof?

America has the civil forfeiture system on "balance of probabilities", which has become a license for police corruption.

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    @Alexei and that sounds like a presumption of guilt. That is like: we will put you in prison unless you can prove you did not commit murder.
    – user253751
    Dec 4, 2019 at 14:14
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    @user253751 nope, the specific case doesn't assume guilty until proven innocent. In that case you know that the person is guilty! Given the law that requires them to declare all income, any income that is not declared makes you guilty of not declaring that money. Whether that's a nice law is a different question, but the proof of guilt is right there as soon as you spot income that is not matched by your declarations.
    – Frank Hopkins
    Dec 4, 2019 at 20:46
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    @FrankHopkins That seems tangential. Failure to declare income doesn't imply that the source of that income is illegal. It just means they were not declared for one of a number of reasons (including, but not limited to, the person in charge of declaring incomes simply forgot about it). IANAL, but I'm fairly certain that illegal sources of income and failure to declare income are two completely different charges.
    – Abion47
    Dec 4, 2019 at 23:37
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    @Abion47 You don't need the source to be illegal when the law says ALL income MUST be declared. If there is more than declared that is already proof of you not following the law. Not having declared is the "crime" not getting the money illegaly. That might come on top. So yes, they are two different things - which was exactly my point, the first part is already proven in that case.
    – Frank Hopkins
    Dec 4, 2019 at 23:39
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    @FrankHopkins The question is specifically about income coming from illegal sources, and the burden of proving that being on the accusing authorities (with the question being specifically why that is). Whether the income in question itself is declared or not is irrelevant. (Although it's probably safe to assume that income from an illegal source would also be undeclared, but again, that's beside the point. Authorities would still need to prove it came from an illegal source in addition to it being undeclared.)
    – Abion47
    Dec 4, 2019 at 23:47
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In 2014, the European Union adopted Directive 2014/42/EU on the freezing and confiscation of instrumentalities and proceeds of crime, and this directive was implemented in Germany on 2017-07-01. As a consequence, likely proceeds of crime can now be confiscated even in cases where it is unclear what exactly the crime was or who committed it.

According to § 437 StPO (in German), the court may base its decision to confiscate, among other things, on “a serious mismatch” between the value of the object and the legal earnings of whoever it is to be taken from.

So the quoted article, which is from 2014, is no longer current.

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    yup, same in the Netherlands. And it's basically become a free for all grabfest for police and courts as they can take whatever they like and just claim it was possibly gained illicitly, and don't even have to give it back if the person it was confiscated from can prove otherwise.
    – jwenting
    Dec 5, 2019 at 6:25
  • See my comment about what Thomas Fischer had to say about that under the OP.
    – Peter - Reinstate Monica
    Dec 5, 2019 at 11:24
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    @jwenting Sources?
    – lejonet
    Dec 5, 2019 at 11:47
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    @lejonet: IIRC the Netherlands had a case where bitcoins were seized and sold, and later the proceeds were returned when the case was dismissed. So the goods themselves were not returned, but the value was. The catch: BTC appreciated against the euro after the sale. So the owner was understandably unhappy.
    – MSalters
    Dec 5, 2019 at 15:08
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    @MSalters I see. But this isn‘t the widespread abuse mentioned above.
    – lejonet
    Dec 5, 2019 at 15:12
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While the current standard will have most likely shifted as explained in other answers I will explain why that is absolutely can be the wrong direction to go.

TlDr.: All together the system is very much imbalanced in favor of the government: BIG (essentially unlimited funds), good at getting people convicted, very little skin in the game vs. accused: small, limited funds, not good at the whole law/court game, huge losses possible.

There a number of reasons for presumption of innocence, one was given by hszmv above: It is hard to prove you didn't do something.

There is/was a discussion below hszmv's answer, explaining how that doesn't apply to money since you always have income statements, receipts etc. It is true that in general the amount of laws currently in place regarding money tracing is substantial (that is a big problem in itself), but it is still quite easy for a company - especially one that is not particularly big - to have problems proving the origin of all the money it owns (has in the bank account). That is even assuming they made no mistakes when actually accounting for it and taxed every penny, which is something that can go wrong by itself without malice (thus without the appropriate response from the state being confiscation).

It is quite possible to lose receipts and statements over time. Not everyone has a perfect filing system that survives 10 years with no hitches (the usual statute of limitations). Companies move, things get misplaced etc.

But it being hard to prove the negative is just one argument for presumption of innocence. The bigger one in my mind is: It's costly and hard to prove you didn't do anything wrong.

The reason the government has to prove you did something wrong and usually beyond a reasonable doubt, is that the government is BIG, and if they accuse a citizen of something, the amount of muscle they can put behind proving them guilty is very large. There are police forces trying to prove a person is guilty of something, and not only are they generally (well) funded, but they have lots of time to try and prove whatever they think is true. It's their job, they get paid for it, and can spend months on a case. They are also quite good at it. They know the system well, (they are the system to some degree) it is not their first rodeo, so to speak. They've tried many people before and will try many after. If it doesn't work out, they generally feel little repercussion, if any. "Oh well didn't get him, life goes on. Just turn up to work again tomorrow."

On the other hand the accused is - with some exceptions (multinationals) - much smaller than the government. They have to make money as they fight whatever case the government brought, or while they sift through the last 6 years of accounts to prove where that money came from. Usually they have to hire someone to help them since they don't know what standard of proof is necessary, who to give the proof to, how to present it etc. And if the accused loses there are severe repercussions, from asset seizure, loss of good name (that can occur even if you win persuasively), extra scrutiny, all the way to serious jail time.

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The general gist is, that Germany is not a common law country but a country of civil law. Historically, the french le Code Civil/Code Napoleon had become the basis for many old laws during the Napoleonic wars in western Germany, while Bavaria, and Prussia designed similar, but earlier civil codes. All of these codes can be traced back to the Justinianic laws of the 600 CE Romans.

In Civil law, the judge has the task of investigating which side's allegations are true, and each side has to pledge their case, providing evidence. There is generally no jury (Schöffengericht, which has lay judges). It is not about crafting a story but providing necessary evidence. Precedent of other, same level courts does not count at all. Each case is investigated in the same way: is there enough evidence? If not, the case is closed because of lack of evidence. And the judge has to inquire how the evidence was obtained.

Argumentation is not a way to win as you can't convince a jury using questionable or questionably obtained evidence - you have to convince the judge who's job is to carefully sift through the evidence of cases every day. Plea deals are also far less common in Germany. So if the State attorney can't prove their case, then the case is lost.

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  • even when the law is no longer active, this is the only correct answer, 3 answers focus on the proving a negative point, while the big deal here is the difference in judicial processes and tasks between anglosaxon and central european countries.
    – CptEric
    Dec 9, 2019 at 13:33
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This is because it is Impossible to "prove a negative". If I were to accuse you of stealing a cookie from the cookie jar and you were required to prove that you were innocent, than how would you do that? There is no way to demonstrate that you did not possess a stolen cookie at any point in time if you did not have the cookie at all... but there are ways to demonstrate that you possessed the cookie (I could have eyewitnesse saying they saw you take the cookie... I could have film evidence of you with your hand in the cookie jar... I could have dusted the cookie jar for fingerprints and uncovered only your prints... I could find dead skin cells on the cookie jar and DNA fingerprint it to a match to a cousin who did a 23 And Me a year ago and show that the DNA matches to a cousin and since you're the only cousin with access to the cookie jar, it must be you).

However, none of those things can exist (save the eyewitnesses) but there's nothing stopping you from getting eye witnesses who can provide you with an alibi that means you couldn't have done it.

But if you didn't do it, but need to prove that you didn't, there is no film evidence (because you didn't do it) nor Finger Prints (because you didn't do it) nor trace DNA (again, because you didn't do it) nor would you produce the missing cookie because you don't have it. Evidence only exists when things interact and never exists when they do not interact or when the interaction occurs in such a way that the evidence is not left.

Because of this, the person making the accusation must prove that the claim is 100% true and no other possible way could it happen. This is why I use the "Who stole the cookies from the cookie jar" children's game as it is an example of an accusation without evidence and the best way to beat the charge: If you have no evidence linking me to the crime, then showing that there exists the possibility that Ryan (sorry, Ryan, not sorry) could have taken them (not that Ryan definitely did, but that he could have) is enough to show you haven't proven that it was definitely me. The idea is that the government has no hard time limit on finding evidence of a crime (yeah, yeah, statute of limitations... they give ample enough time to be sure) but that doesn't mean a person who didn't do it should spend unlimited time in jail if that person could have done it, but the accusers are not sure.

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    Your example does not make sense in this case. All money has a source and (almost) every source can be judged to be legitimate or illegitimate. Therefore it would be possible to ask for evidence that the source of your income or money is legitimate. You can do so easily by showing income statements, receipts, etc. Due to fiscal laws no money of relevant amount should be without some evidence of its source. By the very definition of those fiscal laws the money would be illegitimate if no evidence exists (because you failed to tax it appropriately).
    – Fnguyen
    Dec 4, 2019 at 16:50
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    @Fnguyen "the money would be illegitimate... because you failed to tax it appropriately" What makes you assume that?
    – user76284
    Dec 4, 2019 at 16:53
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    @WGroleau As per "Fundrecht" laws you would have to notify proper authorities and wait for six months after declaring you "found" the money to become its legal owner. Assuming you do all that without arousing suspicion then you actually have "proof" (wrong as it may be) that your money is legitimate. So I agree that even in this case there is proof.
    – Fnguyen
    Dec 4, 2019 at 17:05
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    @user76284 How is this moving goal posts? You cannot be taxed appropriately without knowing the source (German tax % for gifts is different to inheritance is different to tax for X), stating income source is required by law for proper taxation. Even "found" money has a proper and documented source. That does not mean you cannot lie or falsify, money laundering is a thing in Germany. But there is a need for money laundering, money cannot simply appear in your bank statement. You will find authorities will be knocking on your door quickly if it does.
    – Fnguyen
    Dec 4, 2019 at 17:15
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    @Friguyen: If the paper work exists such that I can prove where I got my money from, than the government can certainly get copies of the paperwork to prove where my money came from as well. If they are not willing to do the heavy lifting to prove that I am a criminal, why should I be required to do it for them? Germany does have rules against compelled testimony against ones own self, do they not?
    – hszmv
    Dec 4, 2019 at 18:39

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