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FATF Evaluates San Marino’s Anti-Money Laundering and Combating the Financing of Terrorism Efforts

San Marino, a small European nation-state, has been evaluated by the Financial Action Task Force (FATF) on its anti-money laundering (AML) and combating the financing of terrorism (CFT) efforts. The evaluation, which was conducted between 2019 and 2020, assessed San Marino’s compliance with the FATF Recommendations.

Risk Understanding and Supervision

The Financial Intelligence Agency (FIA) in San Marino has a good understanding of the risk posed by each sector under its supervision. The FIA uses a risk-based approach to AML/CFT supervision, conducting both offsite and on-site inspections. However, there are concerns about the frequency of on-site inspections for higher-risk financial institutions.

Key Findings

  • Good understanding of risk posed by each sector
  • Risk-based approach to AML/CFT supervision
  • Concerns about frequency of on-site inspections for higher-risk financial institutions

San Marino has a sound legal framework in place for money laundering and terrorist financing. The country has criminalized self-laundering and introduced criminal liability for legal persons. Additionally, San Marino has ratified several international instruments and transposed related offenses into its domestic law.

Key Findings

  • Sound legal framework in place
  • Criminalization of self-laundering and introduction of criminal liability for legal persons
  • Ratification of international instruments and transposition of related offenses into domestic law

Registers of Beneficial Owners

San Marino has established registers of beneficial owners of legal persons and trusts, providing the authorities with timely access to basic and beneficial ownership information. However, concerns remain about the accuracy and up-to-dateness of this information for all types of legal persons and arrangements.

Key Findings

  • Establishment of registers of beneficial owners
  • Timely access to basic and beneficial ownership information
  • Concerns about accuracy and up-to-dateness of information for all types of legal persons and arrangements

International Cooperation

San Marino has demonstrated effective cooperation in providing and seeking international assistance, using both formal and informal channels.

Key Findings

  • Effective cooperation in providing and seeking international assistance
  • Use of both formal and informal channels

Risks and General Situation

The San Marino authorities have identified medium to high-level money laundering (ML) risks depending on whether the proceeds derived from domestic or foreign crimes. The country’s banking sector is considered to be the most exposed to ML risk, followed by the insurance sector and financial fiduciary companies.

In its 2019 National Risk Assessment (NRA), San Marino deemed the terrorist financing (TF) risk to be low, citing a thorough analysis of TF threats and vulnerabilities.

Key Findings

  • Medium to high-level money laundering risks
  • Banking sector considered most exposed to ML risk
  • Insurance sector and financial fiduciary companies also at risk
  • Low terrorist financing risk according to 2019 National Risk Assessment (NRA)

Overall Level of Compliance and Effectiveness

Since the adoption of the 4th round Mutual Evaluation Report (MER) in 2011, there have been several legislative developments in San Marino. The country has criminalized self-laundering and introduced criminal liability for legal persons. Additionally, San Marino has ratified international instruments and transposed related offenses into its domestic law.

The San Marino authorities have demonstrated a broad understanding of the vulnerabilities within the AML/CFT system, but some factors, such as misuse of legal persons and complex ML cases, appear to be insufficiently analyzed or understood.

San Marino has achieved a high level of effectiveness in international cooperation and a substantial level of effectiveness in risk, national AML/CFT policies, and coordination. However, there are areas where the country requires improvement, including assessing and understanding the risks posed by legal persons and complex ML cases.

Key Findings

  • Several legislative developments since 2011
  • Broad understanding of vulnerabilities within AML/CFT system
  • Areas for improvement in assessing and understanding risks posed by legal persons and complex ML cases

Recommendations

Based on the evaluation, FATF has made several recommendations to San Marino, including:

  • Improving the frequency of on-site inspections for higher-risk financial institutions
  • Enhancing the analysis and understanding of risks posed by legal persons and complex ML cases
  • Strengthening the legal framework and implementing effective measures against money laundering and terrorist financing

San Marino is expected to implement these recommendations in order to strengthen its AML/CFT regime.

Key Recommendations

  • Improve frequency of on-site inspections for higher-risk financial institutions
  • Enhance analysis and understanding of risks posed by legal persons and complex ML cases
  • Strengthen legal framework and implement effective measures against money laundering and terrorist financing