Financial Crime World

Financial Crime Prevention Measures in Saint Pierre and Miquelon: A Regulatory Focus

In today’s rapidly evolving financial landscape, regulatory bodies continue to emphasize the importance of preventing fraud and financial crime. The island territory of Saint Pierre and Miquelon, with its unique economic and geographical characteristics, is not immune to these threats.

Key Regulatory Challenges

Regulators are increasingly focused on several areas, including:

Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT)

  • Ensuring compliance with international standards and domestic regulations to prevent illicit exploitation of access to the financial system.
  • Implementing effective due diligence and risk assessment procedures for customers and transactions.

Fraud Models and Operations

  • Implementing effective fraud detection and prevention processes to identify suspicious activity and protect consumers.
  • Developing robust risk management practices to mitigate potential exposures.

Insider Corruption

  • Preventing employee misconduct, vendor/third-party misconduct, and other forms of insider abuse that can compromise financial integrity.
  • Establishing a strong compliance culture within the organization.

Cybercrime and Cybersecurity Risk Management

  • Protecting against cyber threats and ensuring robust risk management practices to safeguard customer data and prevent unauthorized access.
  • Implementing incident response plans and conducting regular security audits.

Emerging Regulatory Areas

New areas of focus for regulators include:

Crypto and Digital Assets

  • Strengthening financial safeguards to combat threats and vulnerabilities posed by digital assets, such as non-compliance with existing regulations.
  • Ensuring effective risk management practices for crypto-related transactions.

AML for NFTs and DeFi

  • Expanding AML regulations to include assessing customer due diligence (CDD) and suspicious activity reporting related to NFTs and decentralized finance platforms.
  • Developing guidance on the application of AML/CFT rules to digital assets.

Sanctions and Price Cap Compliance

  • Ensuring continued focus on sanctions and price cap compliance, including virtual currency mining, dark net markets, and bans on services to sanctioned entities/countries.

Interplay with Consumer Protection

Regulators will continue to assess companies in areas such as:

Account Holds and Freezes

  • Ensuring fair processing and treatment of consumer complaints, claims, and disputes related to account holds and freezes.
  • Providing clear guidance on the procedures for account holds and freezes.

Model Development and Validation

  • Analyzing disparities and anti-bias in model development and validation processes.
  • Developing guidance on the application of AML/CFT rules to digital assets.

Payment Sender/Receiver Authentication Procedures

  • Overseeing and monitoring payment sender/receiver authentication procedures, including electronic funds transfers.
  • Ensuring compliance with relevant regulations and standards.

Evolving Risks

Regulators face complex and evolving risks, including:

  • Domestic and international terrorist financing
  • Increased focus on OFAC and Sanctions
  • Transnational criminal organizations
  • Drug and human trafficking, smuggling
  • Proliferation financing

Best Practices for Financial Service Providers

To effectively mitigate these risks, financial service providers in Saint Pierre and Miquelon should:

Add Analytics and Automation to Client Onboarding

  • Implementing effective due diligence and risk assessment procedures for customers and transactions.

Eliminate Antiquated Technology

  • Upgrading systems and processes to ensure compliance with relevant regulations and standards.

Establish a Mature Conduct Risk Program

  • Developing robust risk management practices to mitigate potential exposures.
  • Ensuring compliance with relevant regulations and standards.

Strengthen Controls in Regulatory Focal Areas (FinCEN Priorities)

  • Implementing effective fraud detection and prevention processes to identify suspicious activity and protect consumers.
  • Ensuring fair processing and treatment of consumer complaints, claims, and disputes related to account holds and freezes.