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The Financial Markets Authority (FMA) has issued a formal warning to 12 reporting entities under section 80 of the Anti-Money Laundering and Countering Financing of Terrorism Act.
Under section 59(2) of the Act, the FMA required reporting entities to submit their audit of their Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) risk assessment and AML/CFT programme by 25 November 2016.
The FMA requested the information from 77 reporting entities (REs). This is just under 10% of the REs that the FMA supervises and a risk-based approach was adopted. Selection was partly based on factors including the previous late filing of an AML/CFT annual report and those REs who, for the last two years in a row, said they had not carried out an AML/CFT audit report.
Twelve reporting entities were found to be non-compliant with the law. Nine reporting entities failed to provide their audit, two did not respond to the FMA’s request while one did not submit an AML/CFT annual report as legally required.
The Act requires a reporting entity to ensure its risk assessment and AML/CFT programme are audited every two years or at any other time at the request of the relevant AML/CFT supervisor.
Liam Mason, Director of Regulation at the FMA said:
The regulatory regime to tackle money laundering and the financing of terrorism has been in place for more than three years. Firms and individuals have now had sufficient time to meet the legal requirements, as we stated in our recent monitoring report. We have taken proportionate action to ensure all reporting entities are clear about their obligations under the law.
Independent audits are an essential component of complying with the Act and help ensure that reporting entities have, and will continue to have, robust systems and processes in place to detect and deter money laundering and the financing of terrorism.
The names of the twelve companies and individuals have not been published. All are either small businesses or individuals and to do so would have a disproportionate effect.
Of the 9 entities who failed to provide an audit, all are now taking steps to become compliant by ensuring the audit of their AMF/CFT programmes.
The FMA will take further steps against the two reporting entities who didn’t respond to its requests and the single reporting entity that failed to provide its annual AML/CFT report if they fail to respond to the warnings.