Suspicious Transactions Rise in “Former Yugoslav Republic of Macedonia”

Concerns Over Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Measures

A recent report has highlighted a significant increase in suspicious transactions in “the former Yugoslav Republic of Macedonia”, prompting concerns over its anti-money laundering (AML) and combating the financing of terrorism (CFT) measures.

Effective Reporting System, but Deficiencies Remain

The report noted that 11 reports of suspicious transactions (STRs), including those related to terrorist financing (TF), had increased significantly. This is seen as a positive outcome, demonstrating the effectiveness of the country’s reporting system. However, the report also identified several deficiencies in the country’s AML/CFT regime.

Customer Due Diligence Measures and Politically Exposed Persons (PEPs)

Despite having detailed customer due diligence measures in place, there were still issues with verifying the identity of customers from “reliable, independent source documents, data and information”. Additionally, while the situation regarding PEPs had improved since the last evaluation, enhanced CDD measures did not extend to beneficial owners, and a requirement for financial institutions to establish the source of wealth of PEPs was still missing.

Record-Keeping Requirements and Transparency of Wire Transfers

The report also highlighted issues with record-keeping requirements, noting that while they were largely in place, there was no obligation to maintain records on transactions, identification data, account files, and business correspondence for longer periods if requested by a competent authority. Additionally, financial institutions were not required to provide information on a timely basis to supervisory authorities.

The country’s transparency of wire transfers had improved significantly since the last evaluation, but only the fully effective application of legal provisions remained to be demonstrated.

Supervision and Sanctions

Supervisory responsibilities for AML/CFT compliance monitoring were divided between the Financial Intelligence Office (FIO) and prudential supervisors of financial institutions. While steps had been taken towards applying dissuasive and proportionate sanctions, deficiencies regarding the application of fit-and-proper criteria still remained, along with effectiveness issues.

Designated Non-Financial Businesses and Professions (DNFBPs)

The report also highlighted concerns over DNFBPs, noting that while steps had been taken to align requirements with international standards, supervisory actions and sanctions were not always effective. Additionally, there was a lack of legal and regulatory measures to prevent criminals or their associates from holding significant or controlling interests in businesses.

Cooperation with Other Jurisdictions and Technical Deficiencies

The country’s cooperation with other jurisdictions was seen as active, but the application of dual criminality in its Criminal Procedure Code may negatively impact its ability to provide Mutual Legal Assistance (MLA) due to shortcomings in FT criminalisation. The report also highlighted several technical deficiencies in the country’s legal system and institutional measures.

Convictions and Backlogs

In terms of convictions, the country had achieved 10 final verdicts against 33 individuals for ML offenses between 2008 and 2012, which is proportionate to its size and financial sector. However, significant backlogs in trial stages of ML cases threatened the effectiveness of the AML system.

Autonomous Criminal Offense for Terrorist Financing

The report also noted that the country had introduced an autonomous criminal offense for terrorist financing in 2008, but serious technical shortcomings were identified, limiting its applicability. Additionally, there were no TF investigations or prosecutions in the country.

Conclusion

Overall, while the country has made progress in some areas, significant deficiencies remain, and further efforts are needed to strengthen its AML/CFT regime.