San Marino’s Efforts in Combating Money Laundering and Terrorist Financing
Background
San Marino, a small European country, has been working to combat money laundering (ML) and terrorist financing (TF). In recent years, the Financial Action Task Force (FATF) has recognized San Marino’s efforts in addressing ML risks.
Combating Money Laundering
According to the FATF, San Marino’s legal framework is effective in investigating and prosecuting ML cases. The authorities conduct complex financial investigations to address ML risks faced by the country.
National Risk Assessment
In its 2019 National Risk Assessment (NRA), San Marino deemed the TF risk as “low” based on:
- Analysis of MLA/FIA reports
- Implementation of FATF recommendations
- Establishment of a national enforcing and coordinating body for combating TF
Combating Terrorist Financing
San Marino has recently amended its national legislation to combat TF in line with FATF recommendations. The Committee for Restrictive Measures (CRM) is the national coordinating and policy-making body in this field.
Challenges
Despite efforts, some challenges remain:
- Financial institutions use robust systems to screen clients against UN designations and detect funds
- However, FIs that do not belong to a group could not demonstrate the ability to analyze and independently decide on cases of partial matches of their clients’ data with TFS-related lists
Non-Profit Organizations (NPOs)
The NPO sector has been identified as vulnerable to TF abuse. A dedicated survey conducted by the Financial Intelligence Authority (FIA) together with the Office of the Chief Auditor (OCA) concluded that the TF risks associated with NPOs are considered “low”. However, some NPOs lack knowledge on their respective TFS-related obligations and risks.
Implementing United Nations Security Council Resolutions
San Marino applies TF to persons designated by the UN pursuant to UNSCRs 1718 and 1737. The implementation of TF follows a similar process as for ML.
Countering Proliferation Financing (PF) Terrorist Financing
The CRM acts as the national coordinating and policy-making body in the field of countering PF TFS. No such parties have been identified to date.
Freezing Assets
San Marino has taken steps to freeze assets without delay as part of the implementation of PF TFS. Private sector participants rely on commercial databases or FIA lists to screen their customer base manually.
Ongoing Challenges
Some DNFBPs lack understanding of freezing obligations for PF TFS and may not conduct regular reviews of their client base. Overall, while San Marino has made significant efforts to combat ML and TF, some challenges remain, particularly in the NPO sector and among certain DNFBPs. Continued monitoring and improvement are necessary to ensure effective implementation of anti-money laundering and anti-terrorist financing measures.