Czech Republic’s Anti-Money Laundering Efforts Praised but More Work Needed, Says Council of Europe
MONEYVAL’s Assessment of the Czech Republic’s AML/CFT System
Strasbourg, 11th February 2019 - The Council of Europe’s anti-money laundering (AML) body, MONEYVAL, has praised the Czech Republic’s progress in tackling money laundering (ML) and terrorist financing (TF) but called for a more proactive approach in investigations according to a new report [1].
Commendation for Identified ML Risks
The comprehensive assessment report acknowledges the Czech authorities’ successful identification of ML risks, primarily associated with tax crimes, fraud, corruption, phishing, and subvention frauds. However, further analysis and mitigation measures are suggested to enhance existing risk assessments.
Concerns with ML Investigations
Despite improvements in legislative reforms and increased conviction rates for ML cases, the report points to the need for more investigations into third-party ML and standalone crimes. The Czech justice system’s practice of sanctioning multiple offenses simultaneously complicates assigning exact sentences for ML offenses.
Understanding of ML/TF Risks among Institutions
Banks, financial institutions, and Designated Non-Financial Businesses and Professions (DNFBPs) have varying levels of understanding regarding ML/TF risks. The Financial Analytical Unit and the National Bank serve as primary regulators but concerns were raised about the efficiency of the current supervisory model due to limited resources.
Positive Developments in Legislation and Institutional Framework
The report recognizes positive developments in the legislative and institutional framework related to seizure and confiscation. Law enforcement agencies have effectively conducted financial investigations in relation to proceeds-generating crimes, leading to significant asset confiscations.
Identification of TF Activities
Financial investigations in relation to terrorism offenses revealed potential TF activities within the Czech Republic. These findings led law enforcement to identify suspects involved in TF-related schemes.
Quality and Accuracy of Registers
The quality and accuracy of the Czech Commercial Register vary. Trust and Beneficial Ownership Registers have recently been established but are yet to be fully populated with data.
International Cooperation
Czech authorities are active in international cooperation with foreign counterparts, and this cooperation has been further substantiated by the use of various forms of international assistance.
Invocation of Enhanced Follow-Up Procedure
Based on the evaluation results, MONEYVAL has decided to invoke its enhanced follow-up procedure and has invited the Czech Republic to submit a follow-up report in mid-2020 [2].
[1] Council of Europe, MONEYVAL: Czech Republic 6th round mutual evaluation report FATF Recommendations, https://rm.coe.int/168081a579 [2] The report is available at: Council of Europe, MONEYVAL, https://rm.coe.int/168081a579
About MONEYVAL
MONEYVAL is the monitoring body of the Council of Europe entrusted with assessing countries’ compliance with the main international standards in countering money laundering and the financing of terrorism and evaluating their implementation. It also provides recommendations for necessary improvements to their systems.