San Marino’s Anti-Money Laundering and Counter-Terrorist Financing Measures Under Fire

Inadequate Sanctions Criticized by MONEYVAL Report

San Marino, a small European nation, has come under scrutiny for its inadequate sanctions against individuals and entities that violate anti-money laundering (AML) and counter-terrorist financing (CFT) requirements. According to the latest report by MONEYVAL, an independent financial monitoring body, San Marino’s sanctions regime is in dire need of improvement.

Proportionate Penalties Lacking

The report highlights that the country’s penalties for violating AML/CFT obligations are not proportionate or dissuasive enough to deter offenders. Under San Marino’s current laws, the Office for Control Activities has the power to impose fines ranging from €1,000 to €5,000 on governing councils and foundations that violate their obligations. However, these sanctions are deemed insufficient to effectively curb illicit activities.

Criminal Sanctions Insufficient

The report also criticizes San Marino’s criminal sanctions for violations related to targeted financial sanctions (TFS) against terrorist financing and money laundering. The country’s laws provide for fines ranging from €5,000 to €1 million and up to six years’ imprisonment for individuals found guilty of these offenses.

Progress Made, But More Needed

Despite the shortcomings in its sanctions regime, MONEYVAL has re-rated San Marino as “largely compliant” overall due to its efforts to address technical compliance deficiencies identified in a previous assessment. The country has made progress in implementing measures to prevent money laundering and terrorist financing, but more needs to be done to ensure that its sanctions are effective.

Implications for the Financial Sector

The report’s findings have significant implications for San Marino’s financial sector, as the country’s failure to adequately enforce AML/CFT regulations may undermine confidence in its banking system and increase the risk of illicit activities. The authorities must take concrete steps to strengthen their sanctions regime and demonstrate a commitment to combating money laundering and terrorist financing.

Glossary

• AML/CFT: Anti-money laundering and combating financing of terrorism
• FATF: Financial Action Task Force
• FIA: Financial Intelligence Agency of San Marino
• FUR: Follow-up report
• JA: Judicial Authority
• LC: Largely compliant
• MER: Mutual evaluation report
• ML/TF: Money laundering/terrorist financing
• NC: Non-compliant
• PC: Partially compliant
• R.: Recommendation
• TFS: Targeted financial sanctions