Money laundering through money remittance ... - Council of Europe

2010 - Money Laundering through Money Remittance and Currency Exchange Providers
oversee the process, in which the FIU was actively involved in this Committee
Although the UK is not a member of the euro zone the country has considered the specific ML threats
associated with the introduction of the euro; UK experience has been that, as anticipated, demand for
the 500 euro note in the MR/CE sector has been high (for smuggling/bulk reduction); UK reporting
sectors were alert to the possibility of large quantities of stored legacy currencies surfacing for
exchange, but there were few STRs about this in the event (and most were tax evasion focused).
93. Responding countries indicated that the ML/TF threat in the sector was primarily a result of
both the direct penetration of organised crime group into operations of MR/CE providers and of the
lax implementation of AML/CFT standards.
94. The absence of a formal risk assessment of the sector however does not mean that the
vulnerabilities of the MR/CE have been completely ignored however. Several countries, where the
risks to the sector have not yet been addressed through a national risk assessment emphasised that
competent authorities constantly monitored the sector to identify the possible risks and vulnerabilities,
meet to discuss the problems, and share their experiences.
4.2 Additional measures to be considered at national and international level
95. Knowledge of the sector, services offered and transaction channels: Responses received
point out that competent authorities in many countries do not have a comprehensive picture of the
MR/CE sector and the services provided. The sector is very heterogeneous and remittance service
providers innovate and evolve in developing new transaction channels. In certain jurisdictions,
regulators do not engage in a continuous dialogue with MR/CE providers, thus they do not have a
clear picture of the sector and measures taken by the businesses themselves regarding the control of
their agents, of audit plans, how often agent locations are visited, the turnover of operators, etc.
96. Guidance and training – Money remittance and currency exchange providers tend to lack
the capacity, experience and resources to implement AML/CFT requirements. Therefore regulators
and/or supervisors have a key role to play in providing appropriate guidance to MRs and CEs. In this
regard, adequate guidance for detecting false documentation appears to be a recurring issue of
concern.
97. Implementation of CDD measures – Especially in countries where the AML/CFT
legislation concerning MR and CE service providers is still relatively weak and developing (mostly
due to the fact that countries are in the process of introducing the AML/CFT rules that are in
accordance with international standards, such as in many countries of the former Soviet Union), the
main problem found was weakness in implementing the necessary safeguards and control mechanisms
relating to customer due diligence requirements (including adequate red-flag indicators for obligated
persons). Because of the absence of durable relationships with customers and the nature of
transactions, money remitters and currency exchange offices find it particularly challenging to perform
ongoing monitoring with a view to detect anomalies and risk profiles.
98. Licensing / registration systems – Countries have not always clearly designated the
regulatory or other authority to license and/or register MR/CE service providers and to monitor such
business activity. When designation has occurred sometimes the licensing and control authorities are
split between two agencies which can lead to weakness on oversight of the MR/CE.
99. The data gathered through this research did not permit a conclusion to be drawn on linkages
between the abuse of MR/CE services and the type of regulatory framework, for example, whether the
jurisdictions with a registration regime as opposed to a licensing regime tend to face more cases of the
misuse of MR/CE services or whether jurisdictions with a higher threshold on CDD for wire transfers
observe higher cases of abuse.
38 - © 2010 MONEYVAL and FATF/OECD