Financial Crime World

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Financial Institutions Urged to Improve AML/CFT Compliance

The Financial Intelligence Authority (FIA) of San Marino has reported a significant increase in suspicious transaction reports (STRs) filed by financial institutions and other entities, indicating a step in the right direction towards improving anti-money laundering and combating the financing of terrorism (AML/CFT) compliance.

Challenges Remain Despite Progress

Despite this progress, effective implementation of AML/CFT requirements by financial institutions remains a major challenge, particularly for legacy customers. According to FIA data, from January 1 to November 6, 2009, a total of 190 STRs were filed with the authority, out of which 140 were submitted by banks.

Legacy Customers Pose a Risk

The FIA has noted that many financial institutions’ customer relationships were established before the current AML/CFT requirements came into effect. As a result, these customers may have been accepted in circumstances where there was a high risk that the beneficial owner was not truly known to the financial institution and that the funds involved were the proceeds of some sort of financial crime.

Recommendations for Financial Institutions

To address this issue, the FIA has urged financial institutions to:

  • Verify customer identity and the source of funds or income
  • Engage in risk-based profiling of clients
  • Conduct thorough ongoing monitoring of already established business relationships
  • Perform effective customer due diligence
  • Maintain ready availability of comprehensive information and documents on clients and their transactions

Modified Instruction 2009/03

The FIA has also recommended that financial institutions modify Instruction 2009/03 to clarify that the timeframes specified in it are only “at a minimum” and do not exclude the financial institution’s obligation to conduct ongoing monitoring of the business relationship.

Ongoing Efforts to Combat Money Laundering and Terrorist Financing

The authority’s efforts to improve AML/CFT compliance come as part of its ongoing efforts to combat money laundering and terrorist financing. The FIA has been working closely with financial institutions and other stakeholders to ensure that they are adequately equipped to identify and report suspicious transactions.

Conclusion

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Overall, the FIA’s reporting highlights the importance of effective implementation of AML/CFT requirements by financial institutions in San Marino. The authority’s efforts will continue to focus on promoting good governance and transparency in the country’s financial sector.