San Marino Financial Institutions Face Challenges in Implementing Anti-Money Laundering Measures

Tougher regulations aimed at preventing money laundering and terrorist financing have led to mixed results among San Marino’s financial institutions, as revealed by a recent report. Despite an increase in suspicious transaction reports filed with the Financial Intelligence Agency (FIA), effective implementation of anti-money laundering and combating the financing of terrorism (AML/CFT) requirements remains a significant challenge.

Increased Suspicious Transaction Reports

According to data from the FIA, the number of suspicious transaction reports (STRs) received by the agency has increased significantly since 2007. In 2007, 44 STRs were reported, while in 2008, the figure rose to 110. From January 1 to November 6, 2009, the FIA received 190 STRs, with 140 of those coming from commercial banks.

Challenges in Implementing AML/CFT Requirements

However, a closer examination of the data reveals that many financial institutions are still struggling to implement the AML/CFT requirements effectively. The Financial Intelligence Agency has instructed financial institutions to conduct ongoing monitoring of business relationships, but some institutions may be interpreting this instruction too narrowly.

Key Challenges:

• Legacy customers whose relationships were established before current AML/CFT requirements came into effect
• Difficulty in verifying customer identity and source of funds or income
• Inadequate risk-based profiling of clients

Recommendations for Effective Implementation

To effectively implement the AML/CFT requirements, financial institutions must prioritize:

• Customer due diligence: verifying customer identity and source of funds or income
• Ongoing monitoring of business relationships: conducting risk-based profiling of clients and regular reviews of client activities
• Comprehensive information and documents: ensuring accurate and timely information on clients and transactions

Conclusion

In San Marino, where tax evasion is criminalized only when committed with fraudulent means, the authorities must be able to rely on accurate and timely information from financial institutions to effectively tackle financial crimes. The FIA will continue to monitor the situation and provide guidance to financial institutions to ensure that they are meeting their AML/CFT obligations.

By prioritizing customer due diligence and ongoing monitoring of business relationships, San Marino’s financial institutions can effectively implement anti-money laundering measures and combat the financing of terrorism.