Financial Crime World

Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) in the Republic of Moldova

Good Practices

The supervisors in the Republic of Moldova have demonstrated a good understanding of Money Laundering (ML) risks for most sectors they supervise. This has led to improved governance by banking entities and some non-banking Financial Institutions (FIs). Additionally, the legal framework for international cooperation is well-developed and frequently used.

Areas for Improvement

Despite progress, there are several areas that require attention:

  • Limited understanding of ML/FT risks: Supervisors have limited knowledge of Money Laundering/Financial Terrorism (ML/FT) risks related to Legal Entities (LEs), particularly shell companies.
  • Inadequate measures to prevent misuse: Inadequate measures exist to prevent the misuse of LEs, including fictitious entities.
  • Concerns regarding Basic Obligor information: Concerns exist regarding the accuracy and up-to-dateness of Basic Obligor (BO) information without sanctioning power.
  • Limited understanding among authorities and banks: Limited understanding exists among authorities and banks regarding trusts and similar legal arrangements.
  • Insufficient capacity to verify data: Insufficient capacity exists to verify the accuracy of data recorded in the BO registry.

Recommendations

To address these areas for improvement, we recommend:

  1. Risk assessments and mitigation: Regulatory Entities (REs) should prioritize assessing business-specific ML/FT threats and vulnerabilities, and apply risk-mitigating measures accordingly.
  2. New suspicion-based transaction reporting system: The new suspicion-based transaction reporting system should be implemented as a priority, with internal processes aimed at identifying and reporting ML/FT suspicions tested and supervised for effectiveness and quality.
  3. Sufficient resources for LEAs: Law Enforcement Agencies (LEAs) should be provided with sufficient resources and capacities to make more effective use of financial intelligence.
  4. Confiscation of proceeds: Moldova should consistently employ the legislative framework to the fullest extent to raise the effectiveness of confiscation of proceeds.

International Cooperation

The Republic of Moldova has a well-developed legal framework for international cooperation, but there are some moderate shortcomings regarding Mutual Legal Assistance (MLA) on freezing and confiscation. Bilateral and multilateral agreements have been concluded, and authorities actively seek international assistance for ML and predicate offense cases. However, statistics on incoming/outgoing requests can be improved.

Priority Actions

To address the areas for improvement and recommendations:

  1. Implement new suspicion-based transaction reporting system: Implement the new suspicion-based transaction reporting system as a matter of priority.
  2. Challenge courts with more ML cases: Challenge courts with more ML cases relying on inferences that can properly be drawn from available evidence.
  3. Provide LEAs with sufficient resources and capacities: Provide LEAs with sufficient resources and capacities to make more effective use of financial intelligence.
  4. Consistently employ the legislative framework: Consistently employ the legislative framework to the fullest extent to raise the effectiveness of confiscation of proceeds.
  5. Improve statistics on incoming/outgoing requests: Improve statistics on incoming/outgoing requests.