Council of Europe issues report assessing progress by the Holy See on measures to combat money laundering

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MONEYVAL concludes that a very wide range of legislative and other measures have been taken in a short time by the Holy See to remedy deficiencies identified by the 2012 MONEYVAL report in all areas of the AML/CFT framework, though certain issues still need to be addressed. The following are its main findings:

– The legal structure for criminalising money laundering and terrorist financing, and related confiscation, is in place and much improved but still needs to be tested in practice.

– A new and more comprehensive system for freezing terrorist assets pursuant to United Nations Security Council Resolutions 1267 and 1373 is now operational.

– There are review processes in place to ensure that the financial institutions within the Holy See/Vatican City State know who their account holders are and that full customer identification and verification measures are applied to them, in line with international standards. The process is being conducted under the supervision of the Financial Intelligence Authority (FIA). It is planned to be completed by the first quarter of 2014. It has resulted in accounts being closed and a significant number of suspicious transaction reports in 2013. These are being analysed by the FIA and, where appropriate, referred to the Promoter of Justice.

– The powers of the FIA in its analyses of suspicious transaction reports are now much clearer. MONEYVAL welcomes the restoration of the FIA’s autonomy to negotiate memorandums of understanding, and the conclusion of such memorandums with financial intelligence units of 6 countries. MONEYVAL notes that the FIA’s resources for the operational handling of its analytical work needs re-assessing in the light of current and projected workloads.

– The legislative basis for independent AML/CFT supervision and inspection and the imposition of sanctions has been clarified and strengthened, in line with MONEYVAL’s recommendations. There still have not been formal AML/CFT inspections of the Institute of Works of Religion (IOR) and the Administration of the Patrimony of the Apostolic See (APSA), though inspections are planned to take place by the end of January 2014. These inspections should be completed as soon as possible and should include risk-focused sample testing of customer files.

– MONEYVAL stresses that as the FIA has become the prudential supervisor as well as the AML/CFT supervisor, it needs to staff up this side of its work quickly with experienced professionals in this area. It also urges the authorities to issue regulations on expertise and integrity requirements for responsible persons in financial institutions, so the FIA can take on assessment of their fitness for their roles and examine potential conflicts of interest.

Link to the press release link: click here

Link to the published report: click here