Financial Crime World

Financial Sector in Moldova: Awareness of PF-TFS Risks, But Lack of Guidance and Communication

The financial sector and related supervisory authorities in Moldova have shown some awareness of the risks associated with Proceeds from Financial Services (PF-TFS), but fail to provide guidance and regular communication to reporting entities. As a result, Designated Non-Financial Businesses and Professions (DNFBPs) only screen customers against designations lists and do not take additional screening steps, while Financial Institutions (FIs) struggle to establish beneficial ownership (BO), increasing the risk that the Moldovan financial system may be misused by designated individuals and entities for evading sanctions.

Preventive Measures

The National Bank of Moldova (NBM) has increased awareness among banks regarding business-specific risks, particularly focusing on schemes used in the “Global Laundromat” and UN sanctions lists. However, DNFBPs, except notaries, lack understanding of money laundering (ML)/terrorist financing (TF) risks.

Supervision

The NBM and National Commission for Financial Markets (NCFM) have implemented measures to improve risk management, but these efforts are hindered by limited resources and capacities. The authorities rely heavily on banks to access BO information, which may not be accurate or up-to-date.

International Cooperation

Moldova has a well-developed legal framework for international cooperation, including bilateral and multilateral agreements. The country actively seeks international assistance (MLA and extradition) for ML and predicate offense cases. However, there are some issues with the quality and timeliness of responses from Moldova.

Priority Actions

To address these concerns, the authorities should:

  • Ensure that reporting entities prioritize assessing business-specific ML/FT threats and vulnerabilities, and apply CDD and other risk-mitigating measures.
  • Implement the new suspicion-based transaction reporting system as a matter of priority and test REs’ internal processes for effectiveness and quality of STRs produced.
  • Challenge courts with more ML cases, relying on inferences that can properly be drawn from available evidence.
  • Provide law enforcement agencies (LEAs) with sufficient resources and capacities to make effective use of financial intelligence.
  • Consistently employ the legislative framework to its fullest extent to raise the effectiveness of confiscation of proceeds.

By addressing these priority actions, Moldova can improve its efforts to prevent money laundering and terrorist financing, strengthen international cooperation, and ensure a safer financial system.