Banks Prioritize AML/CFT Compliance Amid Supervisory Pressure
In response to increased supervisory pressure, Moldovan financial institutions have been placing greater emphasis on anti-money laundering and counter-terrorism financing (AML/CFT) compliance measures. However, internal controls beyond the banking sector still lack sufficient attention.
Transparency Among Shareholders’ Structures
According to a recent report, the National Bank of Moldova (NBM) and the National Commission for Financial Markets (NCFM) have taken steps to improve transparency among shareholders’ structures. However, deficiencies remain in certain low-risk sectors such as microfinance.
Supervisory Efforts
The NBM and NCFM conduct background checks to identify beneficial owners and shareholder structures. They also perform on-site and off-site controls to review AML/CFT obligations. While these efforts are commendable, the report notes that supervision of financial institutions could be enhanced with a more risk-based approach.
Gaps in Supervisory Framework
The report highlights gaps in the supervisory framework for designated non-financial businesses and professions (DNFBPs), including:
- Notaries
- Lawyers
- Casinos
- Dealers in precious metals and stones
While awareness-raising activities have been conducted, there is still a need for more comprehensive supervision of these sectors.
Concerns Regarding Beneficial Owners
The report also notes that the authorities lack a comprehensive analysis of money laundering and terrorist financing risks related to legal entities. Although steps have been taken to prevent the misuse of shell companies, concerns remain regarding the accuracy and update of information on beneficial owners.
Recommendations
To address these issues, the report recommends several priority actions:
1. Assessing Business-Specific ML/FT Threats and Vulnerabilities
Financial institutions should prioritize assessing their business-specific ML/FT threats and vulnerabilities and apply risk-mitigating measures.
2. Implementing a New Suspicion-Based Transaction Reporting System
A new suspicion-based transaction reporting system should be implemented as a matter of priority, with internal processes aimed at identifying and reporting ML/FT suspicions tested and supervised for effectiveness.
3. Challenging Courts with ML Cases
The courts should be challenged more frequently with ML cases, relying on inferences that can properly be drawn from available evidence.
4. Providing Resources to Law Enforcement Agencies
Law enforcement agencies should be provided with sufficient resources and capacities to make effective use of financial intelligence.
5. Consistently Employing the Legislative Framework
The legislative framework should be consistently employed to its fullest extent to raise the effectiveness of confiscation of proceeds.
By implementing these recommendations, Moldova aims to enhance its AML/CFT regime and prevent the misuse of its financial system for illicit activities.