Macedonia’s Fight Against Money Laundering: A Mixed Bag

International experts have recently evaluated Macedonia’s efforts to combat money laundering and terrorist financing (ML/TF). While some progress has been made, significant challenges remain.

Limited Effectiveness of Customer Due Diligence Measures

One of the key concerns is the limited effectiveness of customer due diligence (CDD) measures. Enhanced CDD (ECDD) is considered the primary counter-measure against ML/TF, but authorities have not updated the information provided regularly. This lack of transparency hinders the ability to identify suspicious transactions and prevent illicit activities.

Insufficient Suspicious Transaction Reports

The report also highlights the need for improvement in the number of Suspicious Transaction Reports (STRs) submitted by non-banking financial sectors. Although some technical deficiencies were identified, the reporting system seems to work properly in practice. However, the volume of STRs submitted varies between 1% to 8% of ML-related reports, which is considered a relatively low ratio.

Fit and Proper Requirements for Shareholders and Directors

The assessment found that the fit and proper requirements for shareholders and directors are not fully aligned with international standards. While checks are carried out to some extent, they are not thorough enough to ensure the integrity of financial institutions.

Limited Sanctioning System for AML/CFT Breaches

In terms of sanctions for AML/CFT breaches, the report noted that the information provided by authorities shows a very limited sanctioning system in practice. This lack of accountability can undermine efforts to combat ML/TF.

Progress Made in Technical Compliance with FATF Recommendations

The assessment did note welcome progress made by Macedonian authorities in increasing technical compliance with FATF Recommendations targeting designated non-financial businesses and professions (DNFBPs). However, CDD measures applied by some DNFBPs, such as casinos and real estate representatives, were found to be satisfactory. Other DNFBPs, including notaries, lawyers, and accountants, demonstrated lower awareness of beneficial ownership and Politically Exposed Persons (PEPs), and did not apply a risk-based approach in their CDD measures.

Conclusion

The report concluded that while some progress has been made, significant challenges remain in Macedonia’s fight against ML/TF. The country must address these issues to effectively prevent money laundering and terrorist financing activities.