Financial Crime World

North Macedonia’s Anti-Money Laundering Efforts Receive Mixed Reviews

FATF Report Highlights Strengths and Weaknesses in AML Framework

A recent report by the Financial Action Task Force (FATF) has given North Macedonia a mixed assessment of its efforts to combat money laundering and terrorist financing. The country was evaluated on 40 key requirements, with varying levels of compliance.

Areas of Compliance

North Macedonia has made significant progress in several areas, including:

  • Assessing Risk and Applying a Risk-Based Approach (R.1): The country is “largely compliant” with international standards, demonstrating a thorough understanding of risk assessment and mitigation.
  • National Cooperation and Coordination (R.2): North Macedonia has implemented effective mechanisms for cooperation and coordination among government agencies and financial institutions.
  • Regulation and Supervision of Financial Institutions (R.26): The country has established robust regulatory frameworks to oversee financial institutions.

Areas for Improvement

However, in other areas, the country falls short:

  • Confiscation and Provisional Measures (R.4): North Macedonia is “partially compliant,” indicating a need for improvement in confiscating proceeds of crime and implementing provisional measures.
  • Terrorist Financing Offence (R.5): The country’s laws and regulations are not fully effective in preventing terrorist financing activities.
  • Targeted Financial Sanctions Related to Terrorism and Terrorist Financing (R.6): North Macedonia is “partially compliant,” indicating a need for improvement in implementing targeted financial sanctions.

Significant Gaps

The report also highlights significant gaps in the following areas:

  • Customer Due Diligence (R.10): North Macedonia has not implemented adequate customer due diligence practices, which puts it at risk of money laundering and terrorist financing.
  • Record Keeping (R.11): The country’s record-keeping practices are inadequate, making it difficult to track financial transactions and identify suspicious activity.
  • Politically Exposed Persons (R.12): North Macedonia has not established effective procedures for managing politically exposed persons, which increases the risk of money laundering and terrorist financing.

FATF Recommendations

To address these shortcomings, the FATF recommends that North Macedonia:

  • Enhance customer due diligence and record-keeping practices
  • Improve regulation and supervision of designated non-financial businesses and professions (DNFBPs)
  • Strengthen laws and regulations related to higher-risk countries
  • Implement effective reporting mechanisms for suspicious transactions
  • Ensure confidentiality and prevent tipping-off in anti-money laundering investigations

Conclusion

While North Macedonia has made progress in some areas, it must continue to strengthen its anti-money laundering framework to meet international standards. By addressing these areas of concern, the country can improve its compliance with international standards and enhance its efforts to combat money laundering and terrorist financing.