Financial Crime World

Suspicious Transactions Reportedly Increase in Former Yugoslav Republic of Macedonia

A recent report by MONEYVAL has highlighted a significant increase in suspicious transaction reports (STRs) in the former Yugoslav Republic of Macedonia, indicating a positive trend in the country’s efforts to combat money laundering and terrorist financing.

Positive Trend

The report noted that there has been a significant increase in suspicious transactions reported in the country, indicating a positive trend in the fight against money laundering and terrorist financing. This suggests that the country’s efforts to strengthen its anti-money laundering and combating the financing of terrorism (AML/CFT) regime are paying off.

Deficiencies Identified

However, the report also identified several deficiencies in the country’s AML/CFT regime. These include:

  • Incomplete definitions of beneficial ownership: The country lacks a clear definition of beneficial ownership, making it difficult to identify the true owners of companies and other entities.
  • Absence of requirements for financial institutions to verify customer identities from reliable sources: Financial institutions are not required to verify customer identities from reliable sources, which can make it easier for criminals to hide their identity.
  • Lack of requirement for financial institutions to establish the source of wealth of PEPs customers: Financial institutions are not required to establish the source of wealth of customers who are politically exposed persons (PEPs), making it difficult to identify potential money laundering risks.

Supervisory Responsibilities

The report also noted that the supervisory responsibilities for AML/CFT compliance monitoring are divided between the Financial Intelligence Office (FIO) and prudential supervisors, which may lead to inefficiencies. This can make it more difficult to effectively monitor and enforce AML/CFT regulations.

DNFBPs and Corporate Registry

The report also highlighted deficiencies in the country’s regime for Designated Non-Financial Businesses and Professions (DNFBPs). Specifically:

  • Lack of measures to prevent criminals or their associates from holding significant or controlling interests in casinos: The country lacks effective measures to prevent criminals or their associates from owning or controlling casinos.
  • Deficiencies in the corporate registry: The country’s corporate registry does not include a concept of beneficial ownership, making it difficult to identify the true owners of companies and other entities.

Positive Developments

Despite these deficiencies, the report did note some positive developments. These include:

  • Explicit inclusion of the possession and use of proceeds from crime as a physical element of the money laundering offence: The country has explicitly included the possession and use of proceeds from crime as a physical element of the money laundering offence.
  • Significant increase in suspicious transactions reported: As mentioned earlier, there has been a significant increase in suspicious transactions reported in the country.

Challenges Ahead

Despite these positive developments, the report identified several challenges that need to be addressed. These include:

  • Backlog in trial stage ML cases: The country has a significant backlog of money laundering (ML) cases at the trial stage, which is threatening the effectiveness of the AML system.
  • Lack of terrorist financing investigations or prosecutions: There were no terrorist financing investigations or prosecutions in the country during the reporting period.

Conclusion

Overall, while the report noted some positive developments, it identified several areas for improvement in the former Yugoslav Republic of Macedonia’s AML/CFT regime. The country needs to address these deficiencies in order to effectively combat money laundering and terrorist financing.