Financial Crime World

Title: Spain’s Money Laundering and Terrorist Financing Risks: FATF Evaluation and US Assessment

FATF Assessment of Spain’s AML/CTF Regime

According to the Financial Action Task Force (FATF) assessment, Spain’s anti-money laundering (AML) and counter-terrorist financing (CTF) regime is largely compliant with international standards. In the latest follow-up Mutual Evaluation Report conducted in 2019:

  • Spain was Compliant with 28 FATF Recommendations.
  • Spain was Largely Compliant with 10 Recommendations.
  • Spain was Highly Effective for 1 recommendation.
  • Spain was Substantially Effective for 9 areas of effectiveness.

Money Laundering and Terrorist Financing Risks in Spain

Despite these compliance efforts, Spain faces significant ML/TF risks:

Criminal Groups Exploiting Large Resident Communities

  • Organized criminal groups active in Spain, comprised of both Spanish and foreign nationals.
  • Real estate transactions identified as a significant ML means.
  • High-profile cases of cash purchases and complex networks of foreign companies.

Geographical Location Exposing Spain to ML/TF Risks

  • Transit point for drug trafficking from North Africa and South America.
  • Exposure to the risk of ML/TF through illicit cash movements across borders.
  • Informal economy and cross-border trading pose risks of camouflaging cash flows.

Money Transfer Value Sector Vulnerability

  • Vulnerability to organized criminal groups moving assets out of the country.
  • Struggling economy and persistent high unemployment present risks of tax crimes.

Persistent Threats from ETA and Islamist Terrorist Groups

  • Economic wing of ETA with a sophisticated financing structure and ties to France.
  • High TF risks from Islamist terrorist groups with links to al-Qaeda.

General ML/TF Risks Affecting Spain as an Advanced Economy

  • Consolidation in the banking sector potentially adding new vulnerabilities following the 2009-10 financial crisis.
  • Classified as a Country/Jurisdiction of Primary Concern in respect of ML and financial crimes by the US Department of State.

Spain’s Action Against Money Laundering and Terrorist Financing

  • Joined other EU member states in calling for a new supervisory authority to lead EU’s AML/CFT efforts (November 2019).
  • European Commission adopted an action plan for a comprehensive EU policy on preventing ML and TF (May 2020).
  • Implementation of the action plan in July 2021.