Financial Crime World

Slovenia’s Financial Institution Due Diligence Comes Under Scrutiny

A recent report has shed light on the financial institution due diligence practices in Slovenia, with the country receiving a mixed assessment from international regulators.

Compliance and Areas for Improvement

According to the report, Slovenia is largely compliant (LC) with 26 out of the 40 FATF Recommendations, which are designed to prevent money laundering and terrorist financing. However, there are areas where the country falls short:

  • Risk-Based Approach (R.1): Slovenia needs to improve its implementation of a risk-based approach in identifying and mitigating risks.
  • Customer Due Diligence (R.10): The country requires more effective measures for customer due diligence to prevent money laundering and terrorist financing.
  • Record Keeping (R.11): Slovenia’s record-keeping practices need improvement to ensure that financial institutions maintain accurate records.

Strengths and Progress

The report highlights the following strengths:

  • National Cooperation and Coordination Mechanisms (R.2): Slovenia has made significant progress in strengthening its national cooperation and coordination mechanisms.
  • Terrorist Financing Prevention (R.5): The country has implemented effective measures to prevent terrorist financing.
  • Financial Intelligence Unit Functioning (R.29): Slovenia’s financial intelligence unit is functioning effectively.

Challenges and Recommendations

However, the report also notes that:

  • Regulation and Supervision of Financial Institutions (R.26): Slovenia needs to improve its regulation and supervision of financial institutions.
  • Powers of Supervisors (R.27): The country requires more effective powers for supervisors to ensure compliance with anti-money laundering and counter-terrorism financing regulations.
  • Law Enforcement and Investigative Authorities Training and Resources (R.30 and R.31): Law enforcement and investigative authorities require additional training and resources to effectively combat money laundering and terrorist financing.

Response from the Slovenian Government

The Slovenian government has welcomed the report’s findings and has committed to implementing the necessary reforms to strengthen its financial institution due diligence practices:

“We are pleased that our efforts to implement the FATF Recommendations have been recognized, but we also acknowledge the areas where we need to improve. We will continue to work closely with international partners and experts to strengthen our financial institution due diligence practices and ensure the integrity of our financial system.” - Ministry of Finance

Implications for Slovenia’s Financial Sector

The report’s findings come at a time when Slovenia is seeking to further develop its financial sector and attract foreign investment. Strengthening its anti-money laundering and counter-terrorism financing regime is a key priority in achieving this goal.

With the report’s publication, international regulators are now calling on Slovenia to implement the necessary reforms to ensure that it is fully compliant with the FATF Recommendations.