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Money laundering checks in 2023/ Biggest deficiencies found in foreign exchange offices

2024-07-05 09:05:00, Aktualitet CNA

Money laundering checks in 2023/ Biggest deficiencies found in foreign exchange

Illustrative photo, taken from Google

The Bank of Albania also during 2023 carried out inspections in its supervisory entities for the administration of money laundering risk.

Specifically, during the year 2023, inspections were carried out for the prevention of money laundering and the financing of terrorism in 61 entities, including: 5 banks; 5 non-bank financial entities; 1 savings and credit company (SKK); 50 ZKV, of which in 11 ZKV the follow-up of the implementation of the recommendations for the deficiencies found in the previous examination was carried out.

The types of problems identified in banks belong to typologies such as: regulatory framework, due diligence/extended processes, training, staff and centralized system, the report states.

In general, from the on-site inspections carried out in banks during 2023, it has been found that, in matters of PPP/FT risk management, banks pay attention and have increased efforts for an appropriate management of this risk, compliance with legal and regulatory requirements and of the internal regulatory framework in this field.

The identified problems belong to typologies such as: regulatory framework, proper/extended vigilance processes, support to third parties. Banks, in particular, have set up satisfactory structures and systems for this function and have increased the efficiency of preventive measures, which is reflected in the increase in the number and quality of reports of suspicious activities.

Some problems identified in the banks were transactions in physical money in high values; use of personal accounts for business purposes; relying only on the business extract, without analyzing the financial data of the subject (activity) against the client's profile; cases of transactions in physical money over the threshold of one million lek that were not reported.

For non-bank financial institutions (IFJB) and savings and credit societies (SCSC), their inspection revealed deficiencies in the internal regulatory framework for PPP/FT; responsible structure/staff; implementation of appropriate and enhanced vigilance; centralized system; internal control; TF and TFS risk management processes; training; ETC.

The biggest problems were found in foreign exchange offices, for which more administrative measures were taken.

According to the BSH report, from the inspection of the Foreign Exchange Offices (ZKV) deficiencies were identified regarding the lack of knowledge and consequently the non-implementation of legal/regulatory obligations regarding: (i) the implementation of proper/extended vigilance; (ii) the centralized system; (iii) trainings; (iv) lack of evidence documenting the verification regarding TF and TFS; (v) lack of analysis and lack of use of the AIF online reporting portal. In order to address the shortcomings, in addition to the recommendations, administrative measures (fines) were also taken against them.

For the problems identified for the ZKV, it was followed up with supervisory/administrative measures respectively as follows:

– Administrative measure 17 ZKV- Drawing attention 8 ZKV- License revocation 2 ZKV.

Some of the main problems of foreign exchange offices are related to:

- non-compliance with client identification procedures in terms of identifying clients and verifying their identity, as well as deficiencies in maintaining supporting documentation of foreign exchange actions;

- non-compliance with the requirements for taking preventive measures for the creation of a centralized system responsible for collecting and analyzing data and with elements for identifying anomalies;

– insufficient knowledge and non-implementation of legal obligations, as well as by-laws for PPP/PFT;

- lack of evidence for suspected cases of similarity of names with the announced lists and sanctions lists of the United Nations Security Council (UNSC) or evidence that verifications have been carried out with the announced lists. /Monitor