Financial Crime World

Macedonia’s Anti-Money Laundering Efforts Face Challenges

Despite progress in implementing anti-money laundering (AML) and combating financing of terrorism (CFT) measures, Macedonia still faces significant challenges in preventing these financial crimes.

Implementation Progress

According to a recent assessment by the international community, Macedonia has made progress in implementing AML/CFT measures. The country’s reporting obligations have been expanded to include attempted transactions, but the number of suspicious transaction reports (STRs) submitted by non-banking financial sectors remains limited. The authorities’ information on STRs is not regularly updated, making it difficult to track and prevent money laundering.

Challenges

However, several challenges remain:

  • Limited reporting: The number of STRs submitted by non-banking financial sectors is still limited.
  • Inadequate employee screening: Employee screening procedures are not adequately implemented, and the connection between AML/CFT issues and internal audit procedures is weak.
  • Insufficient awareness and training: Other financial institutions may not have the same level of awareness and training as banks in AML/CFT compliance functions.
  • Fit and proper requirements: The country’s fit and proper requirements for shareholders and directors do not fully align with international standards, and checks on these individuals are only carried out to a limited extent in practice.

Supervision and Coordination

The assessment also highlights the need for improved supervision of financial institutions:

  • Coordination among supervisory authorities: There is a lack of coordination and consistency in the approach of Macedonia’s five primary supervisory authorities.
  • AML/CFT law implementation: The country’s AML/CFT law requires supervisors to propose an alignment procedure before submitting a request for a criminal procedure, but this system is not functioning effectively.

Designated Non-Financial Businesses and Professions (DNFBPs)

Awareness of AML/CFT requirements remains low among DNFBPs such as lawyers, accountants, and real estate agents:

  • Risk-based approach: These professionals do not apply a risk-based approach to customer due diligence (CDD) and are not adequately identifying beneficial owners or politically exposed persons (PEPs).

Recommendations

To improve its AML/CFT regime, Macedonia is advised to:

  • Strengthen employee screening procedures
  • Enhance coordination among supervisory authorities
  • Improve the fit and proper requirements for shareholders and directors
  • Increase awareness and training for DNFBPs on AML/CFT requirements
  • Implement a risk-based approach to CDD for all financial institutions
  • Regularly update information on STRs and sanctions

By implementing these recommendations, Macedonia can better protect its financial system from money laundering and terrorist financing.