Financial Crime World

Confiscation of Assets in San Marino Under Scrutiny

San Marino is facing a heated debate over the confiscation of assets seized during criminal investigations, with recent court decisions significantly reducing the amounts confiscated by lower courts. The repatriation of assets seized abroad is also a pressing issue.

Assessment and Risk Management

According to a report released today, the confiscation results reflect the assessment of money laundering and terrorist financing (ML/TF) risks and national anti-money laundering and counter-terrorism financing (AML/CFT) policies and priorities. However, improvements are still possible, particularly in relation to the management of seized and confiscated assets.

  • The report highlights concerns over cross-border transactions of currency, noting that while controls by competent authorities are frequent, the number of sanctions applied does not allow for a final opinion on the effectiveness and dissuasiveness of the system.
  • San Marino has deemed the terrorist financing risk to be “low” in its 2019 National Risk Assessment (NRA).

Terrorist Financing Risk Assessment

San Marino’s NRA is based on an analysis of ML requests, suspicious transaction reports (STRs), cases, and the flow of funds to and from high-risk jurisdictions. San Marino has not been affected by foreign terrorist fighters or other radicalization movements.

  • While there have been no prosecutions or convictions for terrorist financing in San Marino, investigations are ongoing, mostly triggered by STRs.
  • The country uses various tools and techniques to detect and prevent terrorist financing, including inter-authority cooperation facilitated by its small size.

Asset Freeze and Sanctions

San Marino has recently amended national legislation to combat terrorist financing in line with the Financial Action Task Force (FATF) recommendations. A Committee for Restrictive Measures has been established to enforce and coordinate measures related to terrorism financing.

  • However, some financial institutions (FIs) have not demonstrated the ability to analyze and independently decide on cases of partial matches between clients’ data and terrorist financing-related lists.
  • The understanding of freezing obligations by designated non-financial businesses and professions (DNFBPs) also varies, with some representatives lacking knowledge on their TFS-related obligations.

Risk-Based Approach

A dedicated survey on the non-profit organization (NPO) sector was conducted to identify vulnerabilities and terrorist financing risks. The assessment concluded that the risk is considered “low” and a risk-based approach has been implemented.

  • However, some NPOs lacked knowledge on their TFS-related obligations and risks.

Proliferation Financing

San Marino applies freezing orders related to proliferation financing (PF) in accordance with United Nations Security Council Resolutions 1718 and 1737. The implementation of PF-related measures follows a similar process as for terrorist financing, with the Committee for Restrictive Measures acting as the national coordinating body.

  • While private sector participants are generally aware of the need to have measures in place to freeze assets without delay, some DNFBPs lack understanding of their freezing obligations for PF-related measures.