Financial Crime World

Third-Party Involvement in Money Laundering and Terrorist Financing: A Report on the Former Yugoslav Republic of Macedonia

Concerns Over Third-Party Services in Money Laundering and Terrorist Financing Schemes

International authorities have highlighted concerns over the use of third-party services in money laundering (ML) and terrorist financing (TF) schemes in the former Yugoslav Republic of Macedonia. Despite significant progress in implementing anti-money laundering and combating the financing of terrorism (AML/CFT) measures, there are still several areas that require improvement.

Lack of Effective Risk-Based Procedures for Identifying Wire Transfers

  • The report highlights a major concern: the lack of effective risk-based procedures for identifying and handling wire transfers without complete originator information.
  • This weakness can be exploited by criminals to launder money or finance terrorist activities.

Limited Awareness Among Financial Institutions

  • Financial institutions (FIs) are not adequately aware of the importance of screening employees to prevent ML/TF.
  • Some FIs do not apply a risk-based approach in conducting customer due diligence, which is another area of concern.

Need for Better Coordination and Communication

  • The report emphasizes the need for better coordination and communication between supervisory bodies and FIs to ensure effective implementation of AML/CFT measures.
  • This can help identify and prevent ML/TF risks more effectively.

Increase in Suspicious Transaction Reporting, but More Needs to be Done

  • While there has been an increase in reporting suspicious transactions (STRs), the report highlights that more needs to be done to address ML/TF risks.
  • The number of STRs received from designated non-financial businesses and professions (DNFBPs) remains very low.

Designated Non-Financial Businesses and Professions Under Scrutiny

Lack of Awareness Among DNFBPs

  • The report highlights concerns over the lack of awareness among DNFBPs about the importance of identifying beneficial owners and politically exposed persons (PEPs).
  • Some DNFBPs are not applying risk-based approaches in conducting customer due diligence.

Limited Number of Suspicious Transaction Reports from DNFBPs

  • The authorities have expressed concerns over the limited number of STRs received from DNFBPs.
  • In particular, no TF-related STRs were ever submitted to the Financial Intelligence Office (FIO) by DNFBP sectors.

Awareness Raising Programs Needed for Some DNFBPs

  • While some DNFBPs, such as notaries, are more knowledgeable about AML/CFT requirements and have filed STRs, others, such as lawyers and accountants, require further awareness raising programs to improve their understanding of these issues.

Conclusion

The report highlights the need for further improvement in implementing AML/CFT measures, particularly with regards to third-party involvement. The authorities must continue to work together to ensure that the financial sector is adequately equipped to prevent ML/TF and protect its integrity.