Financial Crime World

AML/CFT Compliance Improved, but Some Gaps Remain

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A recent review of the anti-money laundering and combating the financing of terrorism (AML/CFT) measures in [Country] has revealed significant improvements since the last evaluation. However, some gaps still exist, particularly with regards to client due diligence procedures.

Client Due Diligence Procedures

According to Article 8-d of the AML/CFT Act, obliged entities are bound to apply CDD procedures if there is doubt about the veracity or adequacy of previously obtained client identification data. While this provision has been in place since the law’s inception, it was not always clear how it should be applied in practice.

  • Deficiencies in implementation include:
    • Lack of requirements for financial institutions to obtain information on the purpose and nature of business relationships
    • Inadequate procedures for verifying the identity of persons purporting to act on behalf of legal entities
    • No clear definition of the concept of “beneficial owner” or reasonable measures in place to verify their identity

These gaps have since been addressed through amendments to the AML/CFT Act.

Sanctions and Record-Keeping

The review also found that:

  • While sanctions have been imposed for breaches of AML/CFT requirements, it is unclear how many of these fines are specifically related to infringements of the requirements covered by R.5.
  • Deficiencies in record-keeping include:
    • Lack of harmonization between AML/CFT and sectoral laws
    • Inadequate procedures for keeping records on transactions and identification data
    • Unclear procedures for retaining transaction data, which may still be problematic

The review did not detect any breaches of AML/CFT Law with regard to record-keeping provisions.

Suspicious Transaction Reporting

  • The review found that Article 29 of the AML/CFT Act explicitly covers the reporting of attempted transactions.
  • However, some financial institutions have not submitted any suspicious transaction reports (STRs).

Conclusion

While there has been significant progress in implementing AML/CFT measures in [Country], some gaps still exist and require attention to ensure effective implementation. Addressing these gaps is crucial to ensuring the integrity of the country’s financial system and preventing money laundering and terrorist financing.