Germany is failing to do enough to tackle money laundering in one of the world's biggest economies, a global watchdog has found, and will now have to report to the body every year about its progress in weeding out dubious banking. 

The report by the Financial Action Task Force (FATF), an international body that assesses countries from the U.S. to China on financial crime, has dealt a blow to the reputation of Germany, which prides itself on fiscal prudence. 

FATF drew attention to a series of failings, including a low conviction rate and lack of control of those who handle large sums of money, such as estate agents.

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It added that while Germany understood the risks, it had not done enough to tackle them.

The body also criticized the decentralized nature of fiscal supervision, with more than 300 regional authorities in charge of monitoring such players, also stating there weren't enough staff to cover the job. 

Germany prosecuted about 1,000 people for money laundering in 2020. That's despite opening more than 37,000 inquiries, a level of convictions the body considers "very small."

Germany's score is much worse than the EU's second biggest economy, France, which the FATF also recently assessed. 

Germany's finance minister, Christian Lindner, has acknowledged the problem, and promised to centralize control, bring in more staff and update the technology for such money processing.

"We deal with the small fish, while the big fish get away," he told journalists earlier this week before the report's publication, adding that he would do more to "follow the money."

Germany has more banks than any other country in the EU, but many Germans still prefer to use cash, which the FATF said made up three quarters of transactions. There is no upper limit on the size of cash transactions.

FATF also highlighted money laundering risks from 'hawala' payments, which means 'transfer' in Arabic. The system is widely used in the Middle East, moving money through a trusted network of agents who operate outside banks.

FATF urged Germany to take "additional measures ... to more effectively mitigate the risks in relation to cash and hawala services."