Financial Crime World

Assessment Report: Anti-Money Laundering/Combating the Financing of Terrorism Framework of the Former Yugoslav Republic of Macedonia

Overview

The following report summarizes key findings from a 4th assessment visit to the former Yugoslav Republic of Macedonia on their Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) framework. The report highlights progress made in technical compliance with FATF Recommendations and areas where further improvement is needed.

Key Findings

Technical Compliance

  • The former Yugoslav Republic of Macedonia has made significant progress in technical compliance with FATF Recommendations.
  • Despite this progress, there are still some areas that require attention to ensure full compliance.

STR Reporting Obligations

  • STR (Suspicious Transaction Report) reporting obligations have been expanded to cover attempted transactions and a set of indicators for recognizing suspicious transactions has been developed.
  • However, the number of STRs submitted by non-banking financial sectors remains low.

TF Submitted STRs

  • The reporting system seems to work properly in practice with some technical deficiencies identified.
  • STRs are filled constantly by reporting entities (not only banks), and their volume varies between 1% to 8% of the ML related STRs.

Authorized Persons

  • There is no direct and unconditional obligation to appoint an AML/CFT compliance officer, but the AML compliance function seems well established and resourced in banks.
  • This suggests that banks are taking a proactive approach to AML/CFT compliance.

Fit and Proper Requirements

  • The fit and proper requirements are found in sector-specific laws applicable to respective FIs (Financial Institutions), but are not fully in line with international standards.
  • Checks on shareholders and directors are carried out only to a very limited extent in practice.

Supervisory System

  • The supervisory system consists of five primary responsible supervisory authorities, which usually carry out prudential supervision.
  • For AML/CFT purposes, the Financial Intelligence Office (FIO) acts as an additional supervisor.

Sanctions

  • Sanctions are provided for legal entities and responsible persons, with fines ranging from €80,000 to €100,000 in denar counter-value for legal persons, and €5,000 to €10,000 in denar counter-value for responsible persons.
  • These sanctions demonstrate the government’s commitment to enforcing AML/CFT regulations.

Designated Non-Financial Businesses and Professions (DNFBPs)

  • Progress has been made in increasing technical compliance with FATF Recommendations targeting the DNFBP sector.
  • All listed DNFBPs are covered by the AML/CFT Law, except internet casinos.

Awareness and Reporting

  • The CDD measures applied by casinos and real estate representatives seem to broadly cover AML/CFT Law requirements.
  • However, other DNFBPs demonstrated lower awareness of beneficial owners and PEPs, and no attempt is made by notaries, lawyers, and accountants to identify the beneficial owner.

Conclusion

The report highlights progress in technical compliance with FATF Recommendations but identifies areas where further improvement is needed, particularly in relation to awareness and reporting among non-financial sectors. To address these issues, the government should consider implementing additional measures to enhance AML/CFT compliance, such as:

  • Increasing awareness among DNFBPs about beneficial owners and PEPs
  • Implementing effective CDD measures for all sectors
  • Enhancing sanctions for non-compliance with AML/CFT regulations

By taking these steps, the former Yugoslav Republic of Macedonia can further improve its AML/CFT framework and strengthen its position in combating money laundering and terrorist financing.