Financial Crime World

Slovakia’s Financial Institution Security Under Scrutiny by MONEYVAL

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A recent evaluation report by MONEYVAL, an independent body responsible for assessing money laundering and terrorist financing risks in Europe, has highlighted several weaknesses in Slovakia’s financial institution security.

Weaknesses Identified

The report evaluates the country’s anti-money laundering (AML) and countering the financing of terrorism (CFT) regime and its level of compliance with FATF Recommendations. According to MONEYVAL, Slovak authorities have a moderate understanding of national money laundering (ML) and CFT risks, which include:

  • Organized crime
  • Corruption
  • Cybercrime

However, some prosecutors lack a comprehensive understanding of these risks, relying instead on incomplete national risk assessments.

Poor Use of Financial Information

The report criticizes Slovakia’s poor use of financial and other relevant information to gather evidence and detect criminal assets. The outcome of ML investigations and prosecutions is only partially reflective of the country’s response to these risks, with many convictions related to simple property offenses such as car theft.

Deficiencies in Financial Intelligence Unit

The report highlights several deficiencies in the Financial Intelligence Unit (FIU), including:

  • Lack of a central bank account register and beneficial ownership information
  • FIU officials are knowledgeable but lack coherent management guidance for their activities
  • Significant deficiencies in the mechanism for transmitting FIU analyses to relevant agencies
  • Most reports only forwarded to fiscal authorities, not law enforcement

Obstacles to Effective Analysis

The report identifies several obstacles to effective analysis, including:

  • Lack of proceeds-oriented operative analysis
  • Logistical and procedural constraints
  • Limitations on seizing assets from third parties
  • High burden of proof required for certain provisional measures

Confiscation is rarely imposed in criminal cases, and only a fraction of secured assets is ultimately recovered.

Terrorist Financing Concerns

In the area of terrorist financing (TF), there were no convictions during the assessed period. Three complex investigations are still underway. Slovak banks have demonstrated a good understanding of ML/TF risks, but some non-banking financial institutions and designated non-financial businesses and professions struggled to articulate how ML might occur in their institution or sector.

Private Sector Cooperation

The private sector has generally demonstrated an understanding of procedures for reporting suspicious transactions to the FIU and is submitting adequate numbers of reports. The FIU has recently improved its feedback to reporting entities.

Beneficial Ownership Register

Slovakia created a “Register of Legal Entities, Entrepreneurs, and Public Authorities” in 2018, but there are no mechanisms to verify information on actual beneficial owners at the time of registration, except for ex-post control mechanisms by state authorities.

Follow-up Procedure Applied

Based on the results of the evaluation, MONEYVAL has applied its enhanced follow-up procedure to Slovakia. The country will need to address these weaknesses and improve its financial institution security in order to effectively combat money laundering and terrorist financing.