Financial Crime World

Georgia Makes Progress in Fighting Money Laundering and Terrorism Financing

The Committee of Experts on the Evaluation of Anti-Money Laundering Measures and Financing of Terrorism (Moneyval) has released its Fifth Round Mutual Evaluation Report for Georgia, highlighting significant progress made by the country in implementing anti-money laundering and combating the financing of terrorism (AML/CFT) measures.

Supervisory Approaches Praised

The report praises the National Bank of Georgia’s (NBG) supervisory approaches, which have achieved fundamental outcomes essential for a proper AML/CFT system in the financial sector. Since 2015, the NBG has developed its risk-based approach to AML/CFT supervision, demonstrating a comprehensive understanding of sectoral and individual institution risks.

Effective Supervisory Cycle

  • The NBG has established an effective supervisory cycle, conducting proportionate inspections given the size and materiality of the sectors under its supervision.
  • The bank’s AML/CFT Supervision Department is well-resourced and staffed with knowledgeable and engaged professionals.

Compliance of Entities Under Supervision

The report notes that the NBG has shown impact on the compliance of entities under its supervision, with banks and core non-bank financial institutions giving high priority to AML/CFT compliance functions. These institutions have implemented sophisticated internal controls, including:

  • Properly structured compliance functions
  • Training programs
  • Internal audits

Financial Institutions’ Knowledge and Understanding

Financial institutions in Georgia generally have good knowledge and understanding of AML/CFT risks. Large banking groups have put in place effective internal systems and controls to mitigate money laundering and terrorism financing risks. Automated systems for sanctions screening and monitoring of customer transactions are also in place.

Correspondent Relationships, Politically Exposed Persons, and High-Risk Jurisdictions

  • Commercial banks in Georgia demonstrate a good understanding of the risks related to correspondent relationships, politically exposed persons, and high-risk jurisdictions.
  • They have implemented enhanced AML/CFT measures to mitigate these risks.

Technical Compliance with FATF Recommendations

The NBG has established an effective legal and supervisory framework. The bank’s top priority is ensuring that financial institutions’ internal systems comply with FATF recommendations.

Conclusion

In conclusion, the report notes that Georgia has made significant progress in implementing AML/CFT measures, but will continue to work intensively to fulfill the recommendations defined in the Moneyval report and improve AML/CFT compliance levels in the financial sector.