Financial Crime World

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Moldovan Banks Prioritize AML/CFT Compliance Amid Supervisory Pressure

In a bid to strengthen its anti-money laundering and counter-terrorist financing (AML/CFT) regime, Moldovan banks have given higher priority to these issues, implementing compliance functions and training programs in response to supervisory pressure.

Banking Sector Compliance

Moldovan banks are prioritizing AML/CFT compliance by:

  • Implementing compliance functions
  • Conducting training programs for employees
  • Enhancing internal risk assessments
  • Improving governance and transparency

Internal Controls Beyond the Banking Sector

However, internal controls beyond the banking sector remain less developed. Concerns persist about the transparency of shareholders’ structures among low-risk sectors such as microfinance.

Supervisory Measures

The National Bank of Moldova (NBM) and the National Commission for Financial Markets (NCFM) have taken measures to improve transparency among most supervised entities, including:

  • Conducting background checks to identify beneficial owners and shareholder structures
  • Implementing on-site and off-site controls
  • Enhancing supervision with a more risk-based approach, aligning with FATF standards

DNFBPs (Designated Non-Financial Businesses and Professions)

There are gaps in the supervisory framework for DNFBPs such as:

  • Notaries
  • Lawyers
  • Casinos
  • Dealers in precious metals and stones
  • Awareness-raising activities have been conducted, but further measures are needed to ensure compliance

The country’s Transparency of Legal Persons and Arrangements chapter highlights concerns about shell companies being misused, particularly in the context of VAT fraud. The authorities have taken some steps to prevent misuse, but limited measures have been applied to track down fictitious entities.

International Cooperation

Moldova’s legal framework is well-developed and frequently used, with bilateral and multilateral agreements in place. However, some shortcomings persist regarding mutual legal assistance on freezing and confiscation.

Priority Actions

To address these concerns, priority actions have been identified, including:

  • Ensuring that Reporting Entities prioritize the assessment of business-specific ML/FT threats and vulnerabilities
  • Implementing a new suspicion-based transaction reporting system
  • Challenging courts with more ML cases relying on available evidence
  • Providing law enforcement agencies with sufficient resources to make effective use of financial intelligence

Conclusion

The implementation of these priority actions is crucial for Moldova to strengthen its AML/CFT regime and prevent the misuse of its financial system for illicit activities.