Asset freezes in Germany: What international companies need to know

German authorities are increasingly using asset freezes as a powerful tool in anti-corruption enforcement, with ripple effects that can impact a company’s operations worldwide.

German subsidiaries or business operations could face sudden account freezes that threaten liquidity, disrupt operations, and damage reputations, all before a final judgment is rendered.

The challenge is compounded by European Union-wide recognition of these freezes under Regulation (EU) 2018/1805, meaning that measures taken in Germany (or any other EU member state) can swiftly affect a company’s operations across Europe.

How German asset freezes work

German prosecutors have broad authority to freeze corporate bank accounts when they reasonably suspect that company assets originate from illegal activities. The measure is intended to safeguard the potential future confiscation of crime proceeds. It is therefore a preventive instrument designed to ensure that assets remain available if a court ultimately orders confiscation.

Notably, authorities don't need to pinpoint exact criminal proceeds, which is particularly concerning for international businesses. Authorities can freeze entire asset portfolios – including bank accounts, receivables, claims, and even real estate – up to the estimated value of suspected criminal gains even in complex situations such as cross border bribery schemes, intermediaries, layered transactions, or funds mixed with legitimate revenue.

What can trigger a freeze

The threshold for triggering an asset freeze is surprisingly low. Authorities need only concrete suspicion, not conclusive proof, to act. They must also show a need to secure the assets. Such a need exists where future enforcement would be at risk or substantially more difficult – for example, when an asset transfer abroad is likely. Certain scenarios are generally considered higher risk from an enforcement standpoint, including the use of high-risk intermediaries, rapid or opaque fund movements, and complex group structures. In such cases, asset freezes may be imposed where the court considers them appropriate in relation to the offense at issue.

The scope can reach beyond the immediate target. If there is a factual basis to assume that a parent, subsidiary, affiliate, or other third party received or holds assets without legal grounds or benefited from the proceeds of crimes, measures can be directed at them as well. Outside the EU, international cooperation mechanisms can be used to seek enforcement internationally. Within the EU, enforcement is easier because of the mutual recognition system under Regulation (EU) 2018/1805, enabling recognition and execution of freezing orders issued in one member state by others.

German courts have long demonstrated their willingness to support measures taken by other EU member states: For example, a German court recently ordered an asset seizure against a legal entity that had been accused by French authorities of transferring assets to avoid liability. The order was based on the German provisions on asset freezing in conjunction with the German Act on International Mutual Assistance in Criminal Matters and EU Regulation (EU) 2018/1805.

The first hours: Containing operational risk

When an asset freeze hits, the initial response window is decisive. The response during this period can mean the difference between operational continuity and significant business disruption. Companies are encouraged to:

• Activate a cross functional response team spanning legal, compliance, treasury, and local management
  
  
• Stabilize liquidity by confirming exactly what is frozen, drawing on contingency funding lines, and prioritizing essential payments needed to keep the business running and meet regulatory obligations
  
  
• Assemble transaction level evidence to separate allegedly tainted funds from legitimate cash flows and to show if the frozen amount exceeds any realistic estimate of proceeds
  
  
• Where appropriate, show that sufficient unencumbered assets exist to secure potential claims, noting that authorities may not proactively identify those alternatives themselves

In most cases, legal pushback can begin immediately. Companies are encouraged to seek judicial review for necessity and proportionality and propose less intrusive alternatives, such as escrow accounts or guarantees. If an asset freeze has already been ordered, an alternative would be to avert the freeze by depositing the specified amount. In straightforward cases with clear evidence, voluntary restitution or a settlement with potential victims may help to lift or limit the asset seizure, without guaranteeing it.

Building the defense: What persuades courts

Courts are generally receptive to well-structured arguments that the freeze's purpose can be achieved through less intrusive means or that the measure is disproportionate to the suspected offense. Therefore, effective defense in most cases hinges on presenting compelling evidence that tells a clear story about a company's financial operations and compliance efforts. In practice, this often includes:

• A cash flow and tracing analysis that distinguishes potentially tainted amounts from clean working capital and identifies specific accounts and balances suitable for targeted measures
  
  
• Documentation of internal controls, compliance enhancements, and remediation already implemented to show that risks are contained and broad restraints are unnecessary
  
  
• A precise map of legal entities, intercompany flows, and ownership to prevent overreach into uninvolved group companies
  
  
• A quantified assessment of liquidity, regulatory, and business continuity impacts to justify narrower tailoring or substitution with security

The objective at this stage is not to litigate the entire underlying offense. The goal is to demonstrate that the freeze, as implemented, is unnecessarily broad and that alternative security arrangements could achieve the same enforcement objectives without crippling your business operations.

The best defense: Being proactive

The most effective defense against asset freezes begins long before any enforcement action. Companies are encouraged to integrate asset freeze strategies into their compliance frameworks, including up to date inventories of accounts and assets by entity and country, risk mapping of payment routes and counterparties, and agreed-upon templates for security alternatives. Treasury and local finance teams should be trained on how asset freezes work, how releases can be sought, and when to escalate. When readiness, controls, documentation, and governance are in good order, authorities and courts are more likely to accept narrower measures or substitutes for a full freeze, significantly limiting operational disruption.

What’s next: Rising cross border coordination

The trend toward harmonized cross-border asset seizure rules is accelerating, particularly in the fight against corruption and money laundering. More such orders can be expected in the coming years as international cooperation intensifies and enforcement agencies become more sophisticated in tracking and securing assets across borders. The risk of asset freezes will likely increase for international companies, making proactive preparation and strategic response capabilities more important than ever.

For more information, please contact the authors.