Financial Crime World

TFS Screening Obligations: A Global Concern

In recent years, financial institutions and non-profit organizations have faced increasing pressure to adhere to stringent screening obligations due to global financial crises and rising concerns over money laundering (ML) and terrorist financing (TF).

Challenges in Identifying Risk

A recent on-site visit by an international organization revealed several challenges in identifying risk, including:

  • Insufficient understanding of ML/TF risks: Some obliged entities, particularly exchange offices and most DNFBPs, lack a thorough comprehension of ML/TF risks.
  • Limited use of public registries and confirmations: The use of public registries and confirmations for accessing beneficial ownership information is not widespread enough.
  • Failure to consider ML/TF risks in supervisory approaches: ML/TF risks are not adequately taken into account in supervisory approaches.

Supervisory Efforts

Despite these challenges, the visit acknowledged the efforts made by supervisory authorities, including:

  • National Bank of Romania (NBR): Has increased staff numbers and introduced organizational changes to improve AML/CFT supervision.
  • Financial Supervision Authority (FSA) and Non-Profit Organization Control Commission (NOPC): Have implemented remedial measures and sanctions for breaches.

Call to Action

The visit emphasized the need for a more systematic approach to AML/CFT supervision, including:

  • Improved risk understanding: Obvious entities must demonstrate a better understanding of ML/TF risks.
  • Enhanced use of public registries and confirmations: The use of public registries and confirmations should be enhanced for accessing beneficial ownership information.
  • Measuring the impact of supervisory activities: Supervisory authorities should measure the impact of their activities at a strategic level.

Conclusion

While progress has been made in addressing TFS screening obligations, further efforts are required to ensure the effective prevention of ML and TF. International organizations must continue to monitor and support supervisory authorities in their endeavors to combat these threats.