Financial Crime World

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San Marino: AML/CFT Supervision and Risk Assessment

The Financial Intelligence Authority (FIA) of San Marino has a good understanding of the risks within the financial sector under its supervision, applying a risk-based approach to anti-money laundering and combating the financing of terrorism (AML/CFT) supervision. However, concerns remain regarding the effectiveness of on-site inspections for higher-risk institutions.

National Risk Assessment

According to the latest National Risk Assessment (NRA), the level of money laundering (ML) risk varies from “medium” to “medium-high,” depending on whether the proceeds originated from domestic or foreign crimes. The sectors most exposed to ML risks include:

  • Banking
  • Insurance
  • Financial fiduciary companies
  • Dealers in precious metals and stones
  • Providers of services related to games
  • Accountants
  • Lawyers/notaries

AML/CFT Framework

The authorities have taken steps to strengthen their AML/CFT framework, including:

  • Criminalizing self-laundering
  • Introducing criminal liability for legal persons
  • Ratifying international instruments

However, some vulnerabilities within the system remain insufficiently analyzed or understood, particularly in relation to misuse of legal persons and complex ML cases.

International Cooperation

San Marino has demonstrated effective cooperation with other countries in providing and seeking international cooperation, using both formal and informal channels. The country’s confiscation of criminal proceeds, instrumentalities, and property of equivalent value has been successful, and its investigations and prosecutions of terrorism financing have yielded positive results.

Sanctions and Enforcement

The FIA has a range of sanctions available for breaches of AML/CFT obligations, but the overall level of fines issued is relatively low. San Marino’s authorities have completed their second NRA in 2019, which identified areas for improvement, including:

  • Increasing the frequency of on-site inspections for higher-risk institutions
  • Better analyzing ML/TF risks associated with all types of legal persons created in the country

Conclusion

Overall, while San Marino has made significant progress in strengthening its AML/CFT framework, there are still areas that require attention to ensure the effective supervision and risk assessment of its financial sector.