Financial Crime World

Here is the converted article in Markdown format:

San Marino’s Banking Sector Faces Liquidity Pressures Amidst CRSM/Delta Crisis

San Marino’s banking sector is facing significant liquidity pressures due to the tax amnesty and erosion of confidence caused by the CRSM/Delta situation and money laundering concerns. Despite having high levels of liquidity, San Marino lacks traditional liquidity management tools and facilities.

Banking Sector Overview

According to recent data, the banking sector in San Marino represents approximately 9 times the country’s GDP, with total assets standing at €11.5 billion as of June 2009. The largest bank, CRSM, holds a third of the banking sector’s assets. The sector is highly concentrated, with the top three banks accounting for almost three-quarters of total assets and deposits.

Foreign-owned Banks

Foreign-owned banks have been increasing their market share slowly over time, with 25% of assets held in Sammarinese banks owned by foreign banking groups. San Marino’s banking sector relies heavily on foreign intermediation, with a large share of assets placed with Italian banks or foreign securities.

Challenges and Concerns

However, the country’s financial sector is facing challenges from international pressures for more transparency in cross-border financial transactions. The strict bank secrecy regime and favorable taxation have made San Marino attractive to foreign depositors, but this business model is being challenged by growing concerns about money laundering and tax evasion.

CRSM Plan to Strengthen Financial Position

In a move to address the negative political and reputational concerns, CRSM has unveiled a plan to strengthen its financial position. The plan includes a capital injection of €100-€150 million from government, local banking sector, Sammarinese private investors, and current shareholders, as well as the issuance of medium-term bonds. This is expected to bring CRSM’s CAR above 11%.

Nonbank Financial Sector

The nonbank financial sector in San Marino is still in its infancy, with only a few asset management companies, life insurance companies, and small consumer lending companies operating in the country.

Key Statistics

  • Banking sector represents approximately 9 times GDP
  • Total assets: €11.5 billion (June 2009)
  • CRSM holds a third of banking sector assets
  • Foreign-owned banks account for 25% of assets held in Sammarinese banks
  • Risk-weighted average CAR: 15.4% (June 2009), adjusted to 11% after revaluations of untraded equity holdings

Timeline

  • September 2009: San Marino moved to OECD “white list” of countries that have substantially implemented OECD tax standards and MONEYVAL lifted Compliance Enhancing Procedure
  • March 2010: Planned MONEYVAL on-site mutual evaluation of Sammarinese AML/CFT system
  • Mid-January 2010: CRSM shareholders unveil plan to strengthen financial position

Sources

  • San Marino Central Bank
  • MONEYVAL
  • OECD