Moldovan Authorities Urged to Enhance Anti-Money Laundering Efforts

Weaknesses in Identifying Suspicious Transactions Criticized

Chisinau, Moldova - A recent report has criticized the country’s financial institutions and authorities for their lackluster efforts in identifying and reporting suspicious transactions.

Insufficient Internal Controls Beyond Banking Sector

The report assessed the country’s anti-money laundering (AML) and counter-terrorism financing (CFT) measures, finding that while banks had made significant progress in implementing AML/CFT compliance functions and training programs, internal controls beyond the banking sector were much less developed. Supervisors, including the National Bank of Moldova (NBM) and the National Commission for Financial Markets (NCFM), have been urged to take a more risk-based approach to supervision, particularly when it comes to low-risk sectors such as microfinance.

Transparency of Shareholders’ Structures Concerns

The report highlighted concerns over the transparency of shareholders’ structures among most supervised entities, with deficiencies noted in certain low-risk sectors. Background checks are conducted by both supervisors to identify beneficial owners and shareholder structures of financial institutions (FIs), but a more comprehensive approach is needed.

Supervision of FIs Can Be Enhanced

Supervision of FIs could be enhanced through the use of a risk-based approach, aligned with the Financial Action Task Force (FATF) standards. Licenses have been withdrawn from FIs in the past, although not for reasons related to AML/CFT infringements.

Lack of Understanding of Trust and Similar Legal Arrangements

The authorities were also criticized for their lack of understanding of trust and similar legal arrangements, which are not recognized by the country’s legal framework but have been observed as part of the ownership and control structure of some bank customers.

International Cooperation Shortcomings

In terms of international cooperation, Moldova’s legal framework for providing assistance is well-developed, with bilateral and multilateral agreements in place. However, the report noted that there were some shortcomings regarding mutual legal assistance on freezing and confiscation.

Recommendations to Address Concerns

To address these concerns, the authorities have been tasked with prioritizing:

• The assessment of business-specific ML/FT threats and vulnerabilities
• Implementing a new suspicion-based transaction reporting system
• Challenging courts to make more effective use of financial intelligence
• Providing law enforcement agencies with sufficient resources and capacities to effectively investigate money laundering cases

Conclusion

The report emphasizes the need for Moldovan authorities to take a proactive approach in enhancing their anti-money laundering efforts, including improving internal controls, increasing transparency, and strengthening international cooperation.