Financial Crime World

Territory Exposed to Threats of Money Laundering

A recent assessment has identified a range of vulnerabilities that put the territory at risk of money laundering (ML). The report highlights sub-optimal levels of resourcing, lack of proper policies and procedures, inefficient data maintenance, and insufficient training as key threats.

Key Vulnerabilities

  • Sub-optimally resourced agencies
  • Lack of proper policies and procedures
  • Inefficient data maintenance
  • Insufficient training

The assessment also found that specific agencies within the territory are vulnerable to corruption, failure to carry out investigations, limited strategic and operational analysis, and inadequate dissemination of intelligence. Additionally, the prioritization of ML cases is often lacking.

The complexity of legal persons and arrangements, which engage in international financial transactions, makes them highly susceptible to criminal misuse. The sheer volume of registered entities in the territory increases the risk of agents and supervisors being unaware of their activities.

Emerging Products and Technologies

The territory’s lack of understanding of the ML risks posed by emerging products such as:

  • Gaming and betting
  • Cannabis production for medical purposes
  • Decentralized finance (DeFi) instruments
  • Other digital currencies

poses a significant threat. These products can facilitate the transfer of funds and exchange of financial assets without traditional intermediaries, increasing the risk of misuse.

Sectoral-Level Risks

The banking sector in the territory is also vulnerable to ML risk, despite its relatively small size. While most customers are attained through face–face contact, there is a growing trend towards non-face-to-face transactions. The lack of adequate resources and training within the sector exacerbates this risk.

Intelligence Suggests New Threat

Recent intelligence suggests that some individuals are using Hawala-style systems to transfer funds, which could further increase the ML risk in the territory.

Conclusion

The findings of the assessment highlight the need for the territory to take immediate action to address these vulnerabilities and ensure the effective mitigation of ML risks.