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FINANCIAL INTELLIGENCE AGENCY
ANNUAL REPORT2009
www.aif.sm
FINANCIAL INTELLIGENCE AGENCY BANCA CENTRALE DELLA REPUBBLICA DI SAN MARINO
Strada di Paderna, 2 c/o Centro Fiorina47895 Domagnano - Repubblica di San Marino
Tel. 0549 888180 - Fax 0549 888181www.aif.sm
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FINANCIAL INTELLIGENCE AGENCY
ANNUALREPORT
2009
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PREFACE
The article 10, paragraph 2 of the Law n. 92, June 27, 2008 establishes that the Financial In-telligence Agency (FIA) shall present an annual report through the Secretary of State for Finance and Budget to the Great and General Council [Parliament] every year on the activity carried out for the prevention and combating of money-laundering and terrorist financing.
The FIA, established by the above mentioned law 92/2008 and regulated by Delegated De-cree n. 135, October 31, 2008 (subsequently ratified by Delegated Decree n. 146, November 28, 2008) is effective from 24 November 2008.
This document reports for the first time the activity carried out by the Agency over its first year and takes into account even the activity carried out during the last month of 2008.
The report quotes and shows schematically the legislative innovations introduced in the Republic of San Marino, and examines the various functions attributed to FIA by the current legislation and the obtained results, even through statistical data, with particular attention to:
• Regulatory functions;
• Functions regarding a further financial analysis of the reports of suspicious transactions tran-smitted by the obliged parties;
• Functions of supervision over the compliance with the obligations provided for by the laws and the Instructions of FIA;
• National and international cooperation;
• Promoting training activities;
We point out that, in compliance with the terms established by the article 13 of Delegated Decree n. 146/2008, FIA has transmitted the Committee for Credit and Savings the report on the general situation of the financial and instrumental resources used by the Agency over the year 2009.
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INDEX
PREFACE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 3
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 7
1. THE LAWS OF SAN MARINO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 9
1.1 The laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 9
1.2 Law Decrees and Delegate Decrees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 10
2. THE FINANCIAL INTELLIGENCE AGENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 11
2.1 FIA’s institutional position and its organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 11
2.2 Functions and powers of FIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 12
3. ACTIVITIES CARRIED OUT BY FIA IN 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 15
3.1 Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 15
3.2 Regulating functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 15
3.3 Examination of the reports of suspicious transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 16
3.4 Functions of supervision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 23
3.5 National cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 26
3.6 International cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 30
3.7 International relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 36
3.8 Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 36
4. TRANSPORT OF MONEY AND SIMILAR INSTRUMENTS ACROSS
TRANSNATIONAL BORDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 39
5. TIPOLOGIES, METHODS AND TRENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 43
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INTRODUCTION
The year 2009 was without any doubt full of commitments for the Agency; the typical acti-vities of start-up - such as the internal organization and the implementation of new information instruments, the recruitment of new human resources, the transfer to the new office, etc. – ad-ded to the demanding international commitments which FIA and in general the Republic of San Marino had to cope with as a consequence of its adaptation to the Compliance Enhanced Procedure established by the Council of Europe Moneyval Committee issued in April 2008.
We point out that from December 2008 to September 2009 the Republic of San Marino, in compliance with the above mentioned Moneyval procedure, had to draw up four reports which informed such Body on legislative, institutional and operating developments carried out by the various Authorities of San Marino involved in combating money laundering and terrorist finan-cing.
The activity carried out by the Authorities, the drawing up of the documents and their ex-planation over the recurrent Moneyval’s plenary sessions held in Strasbourg allowed this body to rule the revocation of the “enhanced procedure” towards San Marino last September.
For the fulfillment of the functions set forth in the law the Agency has played a significant role in the relationships with the said body and has undertaken the coordination functions in arranging substantial forms required each time.
The revocation of the enhanced procure is not meant as the achievement of a target but as a starting point in order to receive the recognition of the commitment of San Marino in confor-ming to the most advanced standards and to the best practices in combating money laundering and terrorist financing from the international community.
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1. THE LAWS OF SAN MARINO
The laws of San Marino previously in force were characterized by laws (Law n. 123, 15 De-cember 1998 and Law n. 28, 26 February 2004) and enforcing provisions which were no longer in accordance with the international principles established by the FATF/GAFI 40 + 9 Recommen-dations and by the so called third European Union Directive (Directive 2005/60/EC) which have introduced significant innovations subsequently explained.
Such gap, pointed out even by the experts of Moneyval, has been leading the Govern-ments for the last two years and the Great and General Council to arrange and approve several important legislative regulations aimed at adapting the provisions of San Marino to those more advanced.
These important changes in law are subsequently and schematically analyzed.
1.1 The laws
Law n. 92, June 17, 2008 “Provisions on preventing and combating money laundering and ter-rorist financing”.With such provision the legislator has acknowledged the most updated international standards:
• widening the number of the persons subject to the anti-money laundering obligations (divi- ding into financial parties, non-financial parties and professionals);
• introducing the principle of “customer due diligence” which consists of several activities to be carried out by the obliged party (identifying the customer and verifying the customer’s identity, obtaining information and the professional activity, the purpose and intended na- ture of the business relationship or occasional transaction and, if necessary, the source of the funds, conducting ongoing monitoring of the business relationship);
• introducing the obligation to acquire data regarding the so called beneficial owner of the business relationship or occasional transaction, if different from the owner;
• introducing the so called risk based approach which allows the obliged parties to evaluate the obligations of due diligence regarding the risk of money laundering or terrorist financing attributed to each customer (ordinary, simplified or enhanced due diligence);
• updating the provisions regarding the recording of data and information and those relating to the report of suspicious transactions;
• introducing specific provisions on combating terrorist financing;
• introducing several penal and administrative sanctions which are particularly dissuasive;
• providing for the establishment of the Financial Intelligence Agency as the new FIU (Finan- cial Intelligence Unit) of the Republic of San Marino.
Law n. 73, June 19, 2009 “Adjustment of national legislation to international conventions and standards on preventing and combating money laundering and terrorist financing” With this regulation the legislator has introduced some changes in the Law 92/2008 and has introduced or updated some cases in point regarding criminal conduct in his regulations.
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Further normative changes have been directly or indirectly added to the above mentioned legal provisions and are particularly significant in combating money laundering or terrorist fi-nancing:
Law n. 95, June 18, 2008 “Reorganization of the function of supervision on economic activities” by which the Office for Control and Supervision of economic activities (OCSEA) and the Central Liaison Office (CLO) have been established;
Law n. 98, July 21, 2009 “Law on wiretapping” and its attendant regulation approved by the Congress of State with Delegate Decree n.178, December 29, 2009;
Law n. 100, July 22, 2009 “Dispositions on possession and transfer of the bearer shares of anon-ymous joint-stock companies”;
Law n. 104, July 30, 2009 “Law on international letters rogatory relating to criminal matters”
And the more recent:Law n.5, January 21, 2010 “Amendments to Law n. 165 of 17 November 2005” (so called LISF)
Law n.6, January 21, 2010 “Liability of legal persons for offences”
1.2 Law Decrees and Delegate Decrees
Several legislative regulations were issued by the Congress of State – on its own initiative or by delegated law – and subsequently ratified by the Great and General Council. The following regulations are among the most important ones:
Delegate Decree n. 135, October 31, 2008 (Regulations of the Financial Intelligence Agency), subsequently ratified by Delegated Decree 146/2008;
Delegate Decree n. 136, October 31, 2008 (Temporary laws on bearer passbooks), subse-quently modified by Law Decree n. 136, September 22, 2009;
Delegate Decree n. 137, October 31, 2008 (Regulations for the safekeeping, administration and management of frozen economic resources);
Delegate Decree n. 138, October 31, 2008 (Cross-border transportation of cash and similar in-struments), subsequently modified with Delegated Decree n. 62, May 4, 2009 and Delegated Decree n. 74, June 19, 2009;
Law-Decree n. 65, May 14, 2009 (Central Bank brokerage with the purpose of interbank trans-fer of data between San Marino and Italy);
Law-Decree n. 154, November 12, 2009 (Urgent directives on savings deposits).
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2. FINANCIAL INTELLIGENCE AGENCY
2.1 FIA’s institutional position and its organization
The Financial Intelligence Agency – established by the Law 92/2008 and ruled by the Dele-gated Decree 135/2008, subsequently ratified by the Delegated Decree 146/2008 – even thou-gh it has its headquarters at the Central Bank of San Marino, performs the functions assigned to it by the law in force in complete autonomy and independence.
The Central Bank of San Marino provides FIA with the financial means, the instrumental go-ods and the human resources in order to purse efficiently its own institutional purposes.
Such institutional model is in line with the international standards which provide for the operating and managing autonomy, the uniqueness on a national basis in collecting and analy-zing the reports of suspicious transactions (STR), the qualification in its functions of financial analysis and the possibility to exchange directly and independently information of financial or administrative nature, both with the national Authorities and the corresponding foreign FIUs. These are the basic characteristics of a Financial Intelligence Unit.
FIA is qualifiable as administrative FIU since it has mainly administrative functions and po-wers, even though – unlike what occurs in similar cases – the law assigns FIA to “judicial police” functions and powers, generally pertaining to other Authorities.
On the basis of the organization chart suggested by the Director to the Committee for Credit and Savings at the start of FIA’s operativeness, it is currently composed of n. 12 human resources (including the Director and the Deputy Director) placed in the following four organizative units.
AGENZIA DI FINANCIAL INFORMAZIONE INTELLIGENCE FINANZIARIA AGENCY
Organization Chart
Direttore (Director)
Vice Direttore (Deputy Director)
Organizzazione eAmministrazione
(Oganization & Administration)
Regolamentazione e Servizi Legali
(Regulation & Legal Services)
Intelligence Finanziaria(Financial Intelligence)
Vigilanza(AML/CFT Supervision)
Legenda (Explication) Unità Organizzative (Organizative Units)
The following table shows the distribution of the personnel by category.
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Staff of the Financial Intelligence Agency FIASource: FIA - Financial Intelligence Unit of San MarinoPeriod: from 24 November 2008 to March 31, 2010
Sta� FIA
Number of people in sta� the FIA
14
12
10
8
6
4
2
0
Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10
Staff of the Financial Intelligence Agency FIASource: FIA - Financial Intelligence Unit of San MarinoPeriod: from 24 November 2008 to March 31, 2010
Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10Management 2 2 2 2 2 2Executive Employees 1 1 1 2 2 2Employees 4 5 5 6 6 8Total 7 8 8 10 10 12
2.2 Functions and powers of FIA
The article 4 of Law 92/2008 lists the following main functions of FIA including further fun-ctions assigned by other regulations:• receiving suspicious transaction reports from obliged parties; • carrying out financial analyses and investigations on received reports or, on its own initiative,
on the data and information available; • reporting to the criminal judicial Authority any fact that might constitute money-launde-
ring or terrorist financing; • issuing instructions regarding the prevention and combating of money-laundering and ter-
rorist financing; • supervising compliance with the obligations under the law and its instructions; • taking part in international bodies involved in preventing and combating money-launde-
ring and terrorist financing; • promoting and taking part in the professional training of both police officers and the obli-
ged parties.
The Agency shall analyze and study financial flows in order to identify and prevent money laundering and terrorist financing and to suggest the legislator regulatory changes aimed at preventing and combating such crimes.
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In order to perform the functions attributed by the law the Agency has the following powers:• to order the obliged parties to exhibit or hand over documents, also in original copy, or to
communicate data and information, according to the ways and terms established by the Agency;
• to ask the Central Bank or Public Administration to communicate data or information, or to exhibit or hand over any formal papers or documents according to the ways and terms established by the Agency;
• to carry out on-site inspections of the obliged parties. If the obliged party, for the fulfilment of the obligations set forth in Law n.92/2008, makes use of external subjects, the inspec-tions may also be conducted in the offices of said subjects;
• to order the block of assets, funds or other economic resources whenever there are reaso-nable grounds to believe that these assets, funds or economic resources are derived from money-laundering or terrorist financing or may be used to commit such offences;
• to suspend, also upon request by the criminal judicial Authority, suspected transactions of money-laundering or terrorist financing for a maximum of five working days, whenever this does not prejudice investigations;
• to make inquiries about persons who refer to circumstances useful to investigations regar-ding offences of money-laundering and terrorist financing as well as crimes and administra-tive violations set forth in this law.
Furthermore the Agency has the power to impose administrative sanctions in case of ascer-tained failure to comply with the Law, its Instructions or other matters within its competence (for instance the law 100/2009 on anonymous share deposit).
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3. ACTIVITIES CARRIED OUT BY FIA IN 2009
3.1 Preface
The activities carried out by FIA over 2009 need an appropriate subdivision of its specific functions detailed in the previous chapter in six macro-areas:• Regulating functions• Report examination functions• Supervisory functions and pertinent sanctions• National cooperation• International cooperation and relationships• Training.
3.2 Regulating functions
The article 4, paragraph 1, letter d), of law 92/2008 attributes the Agency the function of issuing Instructions regarding the prevention and combating of money laundering and terrorist financing.
Furthermore the article 95 of the above mentioned Law has identified specific themes ac-cording to which the Agency must issue proper Instructions.
In connection with such powers or obligations we point out that the Agency has ruled all the matters above pointed out since the start of its operativeness.
More specifically we point out that FIA – in addition to the “core” matters referred to in the article 95 of Law 92/2008 – has regulated several procedural and substantial aspects which have provided the obliged parties with useful and homogeneous elements and work tools which in some cases (see the Instruction 2009-02) have permitted the resolution of significant operating issues regarding some categories of subjects in their relationships with foreign counterparties.
The Instructions issued by FIA since the start of its operativeness as of 31 December 2009 are summed up as follows:2008-01: Operating aspects concerning the establishment of business relationships or car-
rying out of occasional transactions, registering and maintaining of the data, proce- dure of suspicious transaction reports by standard form;
2008-02: Enhanced procedures for due diligence on customers resident or located in Countri- es, Jurisdictions or Territories subject to strict monitoring by the FATF (subsequently replaced by Instruction 2009-01 and Instruction 2009-08);
2008-03: Identification, verification and assessment of “critical transactions”;2008-04: Specific measures for the electronic transfer of funds;2008-05: Operating rules and procedural aspects of the fight against Money Laundering and
financing of terrorism;2009-01: Enhanced procedures for due diligence on customers resident or located in Countri-
es, Jurisdictions or Territories subject to strict monitoring by the FATF (subsequently replaced by Instruction 2009-08);
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2009-02: Duties to inform foreign counterparts;2009-03: Risk assessment and other evaluations referred to in Article 25 of Law no. 92 of 17
June 2008;2009-04: identification to be carried out through third parties and ways of transmission of
documents and information referred to in Article 29 of Law no. 92 of 17 June 2008;2009-05: Ways for the fulfillment of the obligations referred to in Article 22, paragraph 1, of
Law 92/2008;2009-06: Requirements of customer due diligence, record keeping and suspicious transaction
reporting for the professional practitioners referred to in article 20 of Law no. 92 of 17 June 2008;
2009-07: Typologies of suspicious transactions and procedures for the examination of tran- sactions referred to in article 36 of Law no. 92 of 17 June 2008;
2009-08: Enhanced due diligence procedures for customers resident or located in Countries, Jurisdictions or Territories subject to strict monitoring;
2009-09: Obligations of customer due diligence, data registration and suspicious transaction reporting to be fulfilled by “non-financial parties” referred to in article 19 of Law no. 92 of 17 June 2008;
2009-10: Data and information to be registered and kept under article 34 of Law n. 92 of 17 June 2008;
2009-11: Procedure for irregular cheque reporting under Article 32 of Law no. 92 of 17 June 2008.
3.3 Examination of the reports of suspicious transactionsThe further financial analysis of single transactions or a set of transactions reported by the
obliged parties as potentially suspected of money laundering represents one of the core fun-ction of a FIU.
Over 2009 FIA issued a specific Instruction (2009-07) by which the methodologies and the ways of reporting of the suspicious transactions have been updated (by electronic and standar-dized ways).
As we can see in the following table, a significant number of suspicious transaction reports have been sent to the Agency (the reports sent to FIA reach a total amount of n. 256 from 24 November 2008 to 31 December 2009):
Disclosures received by obliged parties (ex art. 17 L.92/08)Source: FIA - Financial Intelligence Unit of San MarinoPeriod: from November 24, 2008 to December 31, 2009
Disclosures received per month and reporting subjectReportingsubject
Nov.‘08
Dec.‘08
Jan.‘09
Feb.‘09
Mar‘09
Apr.‘09
May.‘09
Jun.‘09
Jul.‘09
Aug.‘09
Sep.‘09
Oct.‘09
Nov.‘09
Dec.‘09 Totale
Financial parties 5 6 11 21 21 5 11 25 15 31 17 20 20 26 234Professionals - 1 - - - 3 - 1 2 - 4 2 4 5 22Non financialparties - - - - - - - - - - - - - - -
Total 5 7 11 21 21 8 11 26 17 31 21 22 24 31 256Daily average1 1,0 0,4 0,6 1,1 1,0 0,4 0,6 1,2 0,8 1,5 1,0 1,0 1,2 1,6 0,91 Average number disclosures received by FIA per working day
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Breakdown of disclosures received per month
Number of disclosures and STRs received by FIA
-
5
10
15
20
25
30
35
Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09
Breakdown of disclosures received per month and reporting subject
-
5
10
15
20
25
30
35
Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Ju-09 Aug-09 Se-09 Oct-09 Nov-09 Dec-09
Financial parties Professionals Non �nancial parties
Variation (%) of disclosures received on previous month1
-100%
-50%
0%
50%
100%
150%
Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09
Variation (%) of number of disclosures and STRs received by FIA
1The variation (%) related to January 2009 is calculated in STRs received in December 2008 and November 2008 (5 working days).
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In comparison with the previous years we can notice a significant increase in the reports which shows a growing attention towards combating money laundering.
Disclosures received per month and reporting subject
Reporting subjectsYear1
2005 2006 2007 2008
Financial parties 20 17 44 98
Professionals - - - -
Non financial parties - - - -
Total 20 17 44 981 Source: AML/CFT - Service of Central Bank of San MarinoPeriod: from January 1, 2005 - to November 23, 2008
As we can see in the following tables, most of the reports come from the financial subjects and particularly from the bank sector, which has sent n. 194 reports.
The data regarding the reports from the professionals are quite satisfactory (a total amount of n. 22 reports), taking into account their recent inclusion in the number of the obliged par-ties with the law 92/2008. Instead the reports sent by the intermediaries of the financial and fiduciary sector (a total amount of n. 35 reports), taking into account the significant number of intermediaries in San Marino and the assets administrated and managed by them. No reports were sent by the other non-financial subjects over 2009.
Such elements led FIA to further analyze the reason of the data shortage, even with inspec-tions in situ both in the previous year and in 2010.
Disclosures received by obliged parties (ex art. 17 L. 92/08)Source: FIA - Financial Intelligence Unit of San MarinoPeriod: from November 24, 2008 to December 31, 2009
Reporting subjects Disclosures (D) No. of reporting subjectsFinancial parties 234 28
Commercial banks 194 10
Financial and Fiduciary companies 35 15
Central Bank of San Marino 3 1
Insurance companies - -
Postal offices 2 2
Collective investments companies - -
Insurance intermediaries - -
Financial promoters
Professional credit recovery on behalf of third parties - -
Non Financial parties - -
Office of the co-trustee - -
Consultancy on matters of investment services - -
Consultancy on tax, financial and commercial matters - -
Credit brokerage - -
Real estate brokerage - -
Gambling houses - -
Custody and transport of cash, securities or values - -
Auction houses or art galleries - -
Trade in antiques - -
Purchase of unrefined gold - -
Export and import of precious metals and stones - -
Professionals 22 15
Accountants 18 11
Notaries and lawyers 4 4
External auditors and actuaries - -
Total 256 43
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Finally, we point out that even in 2009 (as well as in the previous years) no reports concerns the suspect of terrorist financing.
The following table provides a further detail on the typology of the reports sent to FIA.
Disclosures received by obliged parties (ex art. 17 L. 92/08)Source: FIA - Financial Intelligence Unit of San MarinoPeriod: from November 24, 2008 to December 31, 2009
Reporting subjects Attempt transactions Suspicious transactions DisclosuresFinancial parties 51 183 234
Commercial Banks 40 154 194
Financial and fiduciary companies 10 25 35
Central Bank of San Marino 1 2 3
Insurance companies - - -
Postal offices - 2 2
Collective investments companies - - -
Insurance intermediaries - - -
Financial promoters
Professional credit recovery on behalf of third parties - - -
Non Financial parties - - -
Office of the co-trustee - - -
Consultancy on matters of investment services - - -
Consultancy on tax, financial and commercial matters - - -
Credit brokerage - - -
Real estate brokerage - - -
Gambling houses - - -
Custody and transport of cash, securities or values - - -
Auction houses or art galleries - - -
Trade in antiques - - -
Purchase of unrefined gold - - -
Export and import of precious metals and stones - - -
Professionals 2 20 22
Accountants 1 17 18
Notaries and lawyers 1 3 4
External auditors and actuaries - - -
Total 53 203 256
Disclosures received by reporting obliged parties
Financialparties91,4%
Professionals8,6%
20
FIA carries out a further analysis of the reports received which is upgraded through in the collection and processing of data and information drawn by a wide range of sources such as:• information already in FIA’s possession;• information, data and documents in the reporting subjects or other obliged parties’ posses-
sion;• information in other national Authorities’ possession (for instance Police Forces, Public Offi-
ces, etc);• information inferable from public sources (national or foreign business archives or other
providers);• exchange of information with other foreign FIUs.
All the information and documents acquired allow FIA to express a judgement on the au-thenticity of the reported suspect; in such cases FIA transmits the pertinent suspicious transac-tion report, including an account to the Judicial Authority of San Marino.
In case the analysis of the information and documents does not determine a sufficient de-gree of authenticity of the suspect, the report is placed in the archives, it being understood that it may be reassessed at any moment in the light of possible pertinent information.
Since the significant number of reports sent to FIA, it gives priority to those reports which have a higher risk degree based on its configuration, the transferred amounts, the characteristi-cs of the involved subjects or other circumstances considered pertinent.
Discolosures received by �nancial parties
Suspicioustransactions
78,2%
Attempt transactions21,8%
Discolosures received by professionals
Suspicioustransactions
90,9%
Attempt transactions9,1%
21
The following table shows the result of the further analyses carried out by FIA based on the reports received as of 31 December 2009:
Disclosures received by obliged parties (ex art. 17 L.92/08)Source: FIA - Financial Intelligence Unit of San MarinoPeriod: from November 24, 2008 to December 31, 2009
Reporting subjects Disclosures(D)
Cases(Ca)
%Ca/D
Reported to theCourt (RtC)
Financial parties 234 181 77,4% 6
Commercial Banks 194 147 75,8% 5
Financial and fiduciary companies 35 29 82,9% 1
Central Bank of San Marino 3 3 100,0% -
Insurance companies - - - -
Postal offices 2 2 100,0% -
Collective investments companies - - - -
Insurance intermediaries - - - -
Financial promoters - - - -
Professional credit recovery on behalf of third parties - - - -
Non Financial parties - - - -
Office of the co-trustee - - - -
Consultancy on matters of investment services - - - -
Consultancy on tax, financial and commercial matters - - - -
Credit brokerage - - - -
Real estate brokerage - - - -
Gambling houses - - - -
Custody and transport of cash, securities or values - - - -
Auction houses or art galleries - - - -
Trade in antiques - - - -
Purchase of unrefined gold - - - -
Export and import of precious metals and stones - - - -
Professionals 22 17 77,3% -
Accountants 18 14 77,8% -
Notaries and lawyers 4 3 75,0% -
External auditors and actuaries - - - -
Total 256 198 77,3% 6
Cases reported to the Judicial Authority (Court)Source: FIA - Financial Intelligence Unit of San MarinoPeriod: from November 24, 2008 to December 31, 2009
Origin of the disclosuresof information Disclosures Cases
Reported to the Judicial Authoririty
Criminal proceedingsopened after
FIA report
Prosecutions for:
ML3 TF4 Otheroffences
International cooperation 43 42 1 2 1 1 - -
National cooperation 29 27 1 2 1 1 - -
Obliged parties 256 198 6 6 5 - 1
Financial parties 234 181 6 6 5 - 1
Non Financial parties - - - - - - -
Professionals 22 17 - - - - -
FIA own initiative 6 6 - - - - -
Others1 1 1 - - - - -
Total 335 274 8 8 7 - 11 ex art. 37 L.92/08 - Anyone can report to the Agency facts or circumstances relevant to the preventing and combating of money laudering and terrorism financing.2 The case reported to the Court refers to disclosures received before November 24, 2008.3 Money Laundering.4 Terrorism Financing.
22
Prosecutions for ML executed by the Court after receiving disclosures by FIA(ex art. 17 L.92/08)Source: FIA - Financial Intelligence Unit of San MarinoPeriod: from November 24, 2008 to December 31, 2009
Breakdown of cases reported to Judicial Authority for ML per hypothesis of predicate offenceNo. Predicate offence Amounts (eur) 1 Blocking3 Seizure4
2 Drug trafficking 1.535.094 2 no si
1 Fraud or extortion 155.776 si si
1 Misappropriation of assets in bankruptcy 1.100.000 no no
1 Unknown n.d. no no
1 Usury 850.000 no si
1 Usury or extortion n.d. no no
7 Total 3.640.8701 In same cases it is not possible to determine the exact amount of the sums under investigations. This depends on the complexity of transactions and financial instruments used.2 This amount represents only one the cases reported to Judicial Authority.3 Blocking meseaures by FIA (ex art.6 L.92/08).4 Seizures by Judicial Authority.
Prosecutions for other offences executed by Court after receiving disclosures by FIA(ex art. 17 L.92/08)Source: FIA - Financial Intelligence Unit of San MarinoPeriod: from November 24, 2008 to December 31, 2009
Breakdown of cases per subjects involved and offencesNo. Offence Amounts (eur) Blocking1 Seizure2
1 Fraud or misappropriation 800.000 no yes1 Blocking measures by FIA (ex art.6 L.92/08).2 Seizures by Judicial Authority.
The main data emerging from the above mentioned records shows that seizure procee-dings for a total amount of € 4,440,870.00 resulted from the reports sent by FIA to the Judicial Authority.
Breakdown of cases reported to Judicial Authority for ML per hypothesis of predicate o�ence
Drug tra�cking 28,6%Fraud or extortion
14,3%
Misappropriationof assets inbankruptcy
14,3%
Unknown14,3%
Usury 14,3%
Usury or extortion14,3%
23
3.4 Functions of supervision
Over 2009 the supervisory investigations on site carried out by FIA towards all the categori-es of obliged parties were boosted.
There are different kinds and values of supervisory investigations and they can be classified as follows:• general supervisory investigations, by which FIA verifies all the organizational and operating
aspects relating to the obligations imposed by the regulations in force, both primary and secondary;
• specific or sectional supervisory investigations, by which FIA verifies the compliance with spe-cific obligations under these regulations (such as for instance the customer due diligence obligations, registering of data and information, possible omitted suspicious transaction reports etc.); that is by which FIA acquires information in situ and/or documents useful to further analyze FIA’s own activities, that is to carry out possible verifications and/or investi-gations delegated by the Judicial Authority of San Marino.
The following table shows the supervisory investigations carried out over 2009, by typolo-gies of investigations and examined subjects.
On-sit inspectionsSource: FIA - Financial Intelligence Unit of San MarinoPeriod: from November 24, 2008 to December 31, 2009
On-site inspections General inspections (G) Specific inspections (S)
Financial parties 39 7 32
Commercial Banks 24 1 23
Financial and fiduciary companies 15 6 9
Central Bank of San Marino - - -
Insurance companies - - -
Postal offices - - -
Collective investments companies - - -
Insurance intermediaries - - -
Financial promoters - - -
Professional credit recovery on behalf of third parties - - -
Non Financial parties 2 2 -
Office of the co-trustee - - -
Consultancy on matters of investment services - - -
Consultancy on tax, financial and commercial matters - - -
Credit brokerage - - -
Real estate brokerage - - -
Gambling houses 1 1 -
Custody and transport of cash, securities or values - - -
Auction houses or art galleries 1 1 -
Trade in antiques - - -
Purchase of unrefined gold - - -
Export and import of precious metals and stones - - -
Professionals 4 4 -
Accountants 3 3 -
Notaries and lawyers 1 1 -
External auditors and actuaries - - -
Totale 45 13 32
24
As we can see in the following table, the supervisory interventions were significant over the second half of 2009, following the enhancement of the human resources of the specific sector.
On-site inspectionsSource: FIA - Financial Intelligence Unit of San MarinoPeriod: from November 24, 2008 to December 31, 2009
Breakdown of on-site inspections per monthYear 2009 General Inspections Specific Inspections Total
January 1 1 2
February 1 1 2
March - 1 1
April - - -
May - 1 1
June - - -
July 3 2 5
August 5 4 9
September 1 5 6
October - 15 15
November 2 2 4
December - - -
Total 13 32 45
As a consequence of the supervisory inspections carried out, FIA has detected a substantial and general fulfilment of the obligations imposed the regulations in force, taking into account that the overall regulations have been improved over the year.
However FIA imposed corrective interventions or operating suggestions to some exami-ned subjects.
In addition, FIA has sometimes arranged administrative sanctions, having detected oc-casional failures to comply with the regulations liable to fine, detailed as follows.
General on-site inspections
Professionals30,8%
Financialparties53,8%
Non nancialparties15,4%
25
Breakdown of general inspections per violation 1
Main violations and/or deficiencies ascertained No. of inspections in which the violation was found Administrative sanctions (eur)
Law n. 92/2008 (AML/CFT Law) 7 56.090
Obligation of Customer Due Diligence 6 36.340
Registrations and Reporting Obligations 7 17.860
Additional Measures 1 1.890
Instruction no. 01/20082 - -
Instruction no. 03/20083 5 2.650
Instruction no. 04/20084 - -
Instruction no. 05/20085 - -
Instruction no. 02/20096 - -
Instruction no. 03/20097 - -
Instruction no. 04/20098 1 750
Instruction no. 05/20099 - -
Instruction no. 06/200910 - -
Instruction no. 07/200911 - -
Instruction no. 08/200912 - -
Instruction no. 09/200913 - -
Instruction no. 10/200914 1 500
Instruction no. 11/200915 - -
Total 7 59.9901 Data refer to general inspections completed.2 Operating rules and procedural aspect of the fight against Money laudering and financing of terrorism.3 Identification, verification and assessment of “critical transactions”.4 Specific measures for the electronic transfer of funds.5 Operating rules and procedural aspects of the fight against Money laundering and financing of terrorism.6 Duties to inform foreign counterparts.7 Risk assessment and other evaluations reffered to in Article 25 of Law no. 92 of 17 June 2008.8 Identification to be carried out through third parties and ways of transmission of documents and information referred to in Art. 29 of Law no. 92/2008 .9 Ways for the fulfilment of the obligations referred to in Article 22, paragraph 1, letter b.10 Requirements of customers transactions and procedures for the examination of transactions referred to in article 20 of Law no. 92 of 17 June 2008.11 Typologies of suspicious transactions and procedures for the examination of transactions referred to in article 36 of Law no. 92 of 17 June 2008.12 Enhanced due diligence for customers resident or located in countries, juridictions of territories subject to strict monitoring.13 Obligations of customer due diligence, data registration and suspicious transaction reporting to be fulfiled by “non-financial parties” referred to in article 19 of Law no. 92 of 17 June 2008.14 Data and information to be registered and kept under article 34 of Law no. 92 of 17 June 2008.15 Procedure for irregular cheque reporting under Article 32 of Law no. 92 of 17 June 2008.
Autcomes of general on-site inspections
No sanctions38,5% Imposed
53,8%
Still beingprocessed
7,7%
Sanctions61,5%
26
Breakdown of specific inspections per purposePurpose Finantial parties Professionals Non financial parties Total
Acquire documents 19 - - 19
International Cooperation 6 - - 6
National Cooperation 3 - - 3
Analysis of STR 10 - - 10
Verify compliance to: 13 - - 13
Laws 1 - - - -
Delegated Decrees 2 13 - - 13
Total 32 - - 321 i.e.: Law 100/2009 - Provisions on detention and transfer of bearer shares of anonymous companies.2 i.e.: Delegated Decree no. 136/2009 - Transitory regulations relating to bearer passbooks.
3.5 National cooperation
Over 2009 the profitable cooperation with the Authorities of San Marino involved in diffe-rent ways in the national anti-money laundering “system” was particularly intense, that is:• the Central Bank;• the Civil and Penal Tribune;• the Police Forces (Gendarmerie, Civilian Police Force and Guardians of the Rock);• the Office for Control and Supervision of Economic Activities (UCSEA);• Central Liaison office (CLO);• Other offices.
As we can see in the following table, the reports or requests of cooperation sent by such authorities amount to n. 100, whereas the requests of information or cooperation formulated by FIA were n. 47.
National cooperation of the Financial Intelligence Unit of San MarinoSource: FIA - Financial Intelligence Unit of San MarinoPeriod: from November 24, 2008 to December 31, 2009
Requests of cooperation and spontaneous sharing of informationNational Institutions Incoming data
(Id)of which disclosures
of STRs%
STRs/IdOutgoingdata (Od) Total
Supervision department of CBSM1 22 7 31,8% 1 1 33
Inspection Supervision Service 13 6 46,2% 2 15
Others Services 9 1 11,1% 9 18
Interpol 6 6 100,0% - 6
Police Forces 17 5 29,4% 16 33
Gendarmeria 4 2 50,0% 15 19
Polizia Civile 3 2 66,7% 1 4
Guardia di Rocca 10 1 10,0% - 10
Judicial Authority 40 - 0,0% 8 48
Other Offices 15 11 73,3% 12 27
Central Liaison Office 4 3 75,0% - 4
UCVAE2 8 8 100,0% 2 10
Others3 3 - 0,0% 10 13
Total 100 29 29,0% 47 1471 CBSM means Central Bank of San Marino.2 UCVAE meams Office for Control and Supervision of Economic Activities.3 For example: Office of real estate register, Tax Office, Commercial registry of companies, etc.
27
Twenty-nine disclosures out of 100 sent to FIA have been considered suspicious transac-tion reports, which were analyzed following the methods previously described; other reports concern breaches regarding the obligation to channel bearer securities, the transport of cash across transnational borders and investigations on natural and juridical persons, that is requests of cooperation from the Criminal Judicial Authority in order to carry out verifications deriving from internal criminal proceedings or international rogatory.
The reports regarding breaches of the article 31 of Law 92/2008 (channelling obligations) permitted FIA to impose sizeable administrative fines, as pointed out in the following tables.
Requests for cooperation ans spontaneous sharing of informationreceived from National Institutions (incoming data)
Other O�ces15,0%
SupervisionDepartment of CBSM
22,0%
Interpol6,0%
Police Forces17,0% Judicial
Authority40,0%
Requests for cooperation and spontaneous sharing of informationsent to National Institutions (outgoing data)
SupervisionDepartmentof CB BCSM
23%
Police Forces34,0%
JudicialAuthority
17,0%
Other O ces26%
Requests for cooperation and spontaneous sharing of informationreceived from Judicial Authority (incoming data) relating to:
Financialinvestigations
relating toRogatory letters
45,0% Financialinvestigations
relating tocriminal
proceedings(prosecutions)
55,0%
28
Violations ascertained ex art. 31 L. 92/2008 relating to limitationson the use of cash and bearer securitiesSource: FIA - Financial Intelligence Unit of San MarinoPeriod: from November 24, 2008 to December 31, 2009
Cash (ex art. 31.1 L. 92/2008)Year 2009 Violations
ascertainedNatural
persons (N)Legal
Entities (L)Administrativesanctions (eur)
January - - - -
February - - - -
March - - - -
April - - - -
May - - - -
June 4 2 2 59.354
July - - - -
August 2 - 2 18.577
September 5 - 5 113.613
October 3 - 3 89.260
November 4 - 4 451.922
December 9 - 9 174.124
Total 27 2 25 906.850
Nationality orAddress
Naturalpersons (N)
of whichPEPs (P) % P/N Legal
Entities (L) Total
Italy - IT 1 - 0,0% 15 16
San Marino - SM 1 - 0,0% 10 11
Total 2 - 0,0% 25 27
Average administrative sanction (eur) per cash and bearer securities
33.587
120
31.182
-5.000
10.00015.00020.00025.00030.00035.00040.000
Ca Cheques Bearer passbooks
29
Cheques (ex art. 31.2 L.92/2008)Year 2009 Violations
ascertainedNatural
persons (N)Legal
Entities (L)Administrativesanctions (eur)
January - - - -
February - - - -
March 1 - 1 300
April 2 2 - 200
May 1 - 1 100
June - - - -
July 2 1 1 200
August 1 - 1 100
September 2 1 1 200
October 1 - 1 100
November - - - -
December - - - -
Total 10 4 6 1.200
Nationality or Address Natural persons (N) of which PEPs (P) % P/N Legal Entities (L) Total
Italy - IT 2 - 0,0% 1 3
San Marino - SM 2 - 0,0% 5 7
Total 4 - 0,0% 6 10
Bearer passbooks (ex art. 31.3 L.92/2008)Year 2009 Violations
ascertainedNatural
persons (N)Legal
Entities (L)Administrativesanctions (eur)
January - - - -
February - - - -
March - - - -
April - - - -
May - - - -
June - - - -
July 2 2 - 62.365
August - - - -
September - - - -
October - - - -
November - - - -
December - - - -
Total 2 2 - 62.365
Nationality or Address Natural persons (N) of which PEPs (P) % P/N Legal Entities (L) Total
Italy - IT 2 - 0,0% - 2
Total 2 - 0,0% - 2
Infringements or infractions
clause“non transferable”
missing90,0%
name of thebene�ciary missing
10,0%
30
As for the national cooperation, the National Technical Cooperation Committee, established by decision n. 6 of the Congress of State on 29 May 2009, has had a great importance over the year.
The Committee – formed by the representatives of the Financial Intelligence Agency, the Civil and Penal Tribune, the Central Bank, the Police Forces, the Secretary of State for Foreign Affairs and the Secretary of State for Finance – has the task to co-operate with the Committee for Credit and Savings in order to define and develop the technical lines of action to make the regulations on combating money laundering and financing international terrorism more effec-tive and efficient.
The Committee, which was called several times over 2009, has analyzed some vulnerabili-ties of the system of San Marino and has proposed corrective interventions, some of which have already been carried out.
3.6 International cooperation
FIA – in compliance with the most recent international principles – gives great importance to the international cooperation and relationships, aimed at the exchange of information with similar foreign FIUs.
Over 2009 FIA drew up five Memoranda of Understanding (MOU) with the FIU of Russia, Po-land, the Republic of Serbia, Ukraine and Kosovo-Eulex.
Furthermore, ten MOU have already been drawn up since the beginning of 2010.Such Memoranda of Understanding are added to the nine memoranda already signed by
the FIU of San Marino in its previous institutional role (Office of Banking Supervision and Central Bank of San Marino).
The procedures for the signing of further agreements with European and non-European Countries are currently in progress.
List of the Memoranda of Understanding currently in force*
• 2003 : Czech Republic• 2005 : Principality of Monaco• 2005 : Peru• 2006 : Slovenia• 2006 : Israel• 2007 : Liechtenstein • 2007 : Sweden• 2008 : Switzerland• 2008 : Norway • 2009 : Russian Federation• 2009 : Poland• 2009 : Serbia
• 2009 : Ukraine• 2009 : Eulex-Kosovo• 2010 : Macedonia• 2010 : Georgia• 2010 : Andorra• 2010 : Armenia• 2010 : Latvia• 2010 : Malta• 2010 : Man’s Island• 2010 : St. Vincent and Grenadines• 2010 : Belgium• 2010 : Portugal
*as of the date of publication of the current report
31
The exchange of information with the foreign FIU, both on the basis of specific memoranda of understanding and on mutual terms, is particularly useful to further analyze the suspicious tran-snational financial flows and to get information or data regarding non-resident subjects or bodies.
Furthermore, such aspect is particularly important in small States such as San Marino, where – not infrequently – the reported transactions have been carried out or attempted by non-resident subjects who have only financial connections in the Republic.
As we can see in the following table, the requests of information sent to FIA and those addres-sed to the foreign FIU by FIA were significant over 2009.
International cooperation of Financial Intelligence Unit of San MarinoSource: FIA - Financial Intelligence Unit of San MarinoPeriod: from November 24, 2008 to December 31, 2009
More precisely the exchange of information have taken place with the following foreign FIUs:
Requests of cooperation received by FIA (incoming requests)Fully completed Partially completed Still being processed Refused Total
Albania - AL 2 - - - 2
Austria - AT 1 - - - 1
Belgium - BE 1 - - - 1
Bosnia Herzegovina - BA 1 - - - 1
Costa Rica - CR 2 - - - 2
Estonia - EE 1 - - - 1
Germany - DE 1 - - - 1
Ireland - IE 1 - - - 1
Italy - IT 13 - - - 13
Luxembourg - LU 1 - - - 1
Macedonia - MK 1 - - - 1
Moldova - MD 1 - - - 1
Nigeria - NG 1 - 1 - 2
Serbia - CS 2 - - - 2
Slovenia - SI 1 - - - 1
Spain - ES 1 - - - 1
Sri Lanka - LK 1 - - - 1
Switzerland - CH 1 - - - 1
Taiwan - TW 1 - - - 1
Turkey - TR 1 - - - 1
Regno Unito - GB 1 - - - 1
Venezuela - VE 3 - 1 - 4
Total 39 - 2 - 41
International cooperation per year
0
38
0
41
16
0 205
1015202530354045
2008 2009
Requests of cooperationsent by FIA(outgoing requests)
Requests of cooperationreceived by FIA(incoming requests)
Spontaneous sharing ofinformation sent by FIA
Spontaneous sharing ofinformation received by FIA
32
Breakdown of requests of cooperation received by FIA per origin
Venezuela -VE
Albania -AL
Costa Rica -CR
Italy -IT
Nigeria -NGSerbia -CS
Other Countries
Breakdown of requests of cooperation received by FIA per type
Requestsaddressed to
San Marino FIU56,1%
Requestsaddressed to all
FIUs (�shing requests)43,9%
Average time (days) taken to respond to requests1
Incoming requests addressed to San Marino FIU
1 Average time taken to respond to requests addressed to San Marino FIU is 15,2 days.
0
5
10
15
20
25
AL AT EE IE IT LU SI ES CH GB
33
Requests of cooperation sent by FIA (outgoing requests)Fully completed Partially completed Still awaiting for
informations Refused Total
Bahamas - BS 1 - - - 1
Cyprus - CY 1 - - - 1
Guernsey - GG 1 - - - 1
Italy - IT 13 3 14 - 30
Jersey - JE 1 - - - 1
Spain - ES 1 - 1 - 2
Switezerland - CH 2 - - - 2
Total 20 3 15 - 38
Spontaneous sharing of informationIncoming Outgoing Total
France - FR - 1 1
Italy - IT - 5 5
Kosovo - KO 1 - 1
Romania - RO - 1 1
Thailand - TH 1 - 1
Total 2 7 9
Average time (days) taken to respond to �nishing requests1
Incoming requests addressed to all FIUs
1 Average time taken to respond to request addressed to all FIUs (�nishing requests) is 25,3 days.
05
101520253035404550
BE BA CR DE MK MD NG CS LK TW TR VE
Breakdown of requests of coooperation sent by FIA per destination
Italy -IT
Spain -ES
Switzerland -CH
BS
CY
GG
JE
OtherCountires
34
Incoming requests of cooperation and spontaneous sharing of information nov-08 dec-08 jan-09 feb-09 mar-09 apr-09 may-09 jun-09 jul-09 aug-09 sep-09 oct-09 nov-09 dec-09 Total
Albania - AL - - - - - 1 - 1 - - - - - - 2
Austria - AT - - - 1 - - - - - - - - - - 1
Belgium - BE - - - - - - 1 - - - - - - - 1
Bosnia Herzegovina - BA - - - - - - - - - - - 1 - - 1
Costa Rica - CR - - - 1 1 - - - - - - - - - 2
Estonia - EE - - - - - - 1 - - - - - - - 1
Germany - DE - - - - - - 1 - - - - - - - 1
Ireland - IE - - - - - - - 1 - - - - - - 1
Italy - IT - - 3 1 3 - 1 1 - 2 2 - - - 13
Kosovo - KO - - - - - - - - - - - - - 1 1
Luxembourg - LU - - - - - - - - - 1 - - - - 1
Macedonia - MK - - - - - - 1 - - - - - - - 1
Moldova - MD - - - - - - - 1 - - - - - - 1
Nigeria - NG - - - - - - - - - 1 - - - 1 2
Serbia - CS - - - - - - 2 - - - - - - - 2
Slovenia - SI - - - - - - - - - - - 1 - - 1
Spain - ES - - - - - - - - - - - - - 1 1
Sri Lanka - LK - - - - - - - - 1 - - - - - 1
Switzerland - CH - - - - - - - - - 1 - - - - 1
Taiwan - TW - - - - - - 1 - - - - - - - 1
Thailand - TH - - - - - - 1 - - - - - - - 1
Turkey - TR - - - - - - 1 - - - - - - - 1
United Kingdom - GB - - - - - - - 1 - - - - - - 1
Venezuela - VE - - - - - - 1 - - - - - 1 2 4
Total - - 3 3 4 1 11 5 1 5 2 2 1 5 43
Outcoming requests of cooperation and spontaneous sharing of informationnov-08 dec-08 jan-09 feb-09 mar-09 apr-09 may-09 jun-09 jul-09 aug-09 sep-09 oct-09 nov-09 dec-09 Total
Bahamas - BS - - - - - - - - - - - 1 - - 1
Cyprus - CY - - - - - - - - - - - 1 - - 1
France - FR - - - - 1 - - - - - - - - - 1
Guernsey - GG - - - - - - - - - - - 1 - - 1
Italy - IT - 1 1 3 1 - 1 1 1 17 1 3 - 5 35
Jersey - JE - - - - - - - - - - - 1 - - 1
Romania - RO - - - - 1 - - - - - - - - - 1
Spain - ES - - - - - - - - - - - 1 - 1 2
Switzerland - CH - - - - - - - - - - - 2 - - 2
Total - 1 1 3 3 - 1 1 1 17 1 10 - 6 45
Spontaneous sharing of information
Outgoing77,8%
Incoming22,2%
35
Requests of cooperation and spontaneous sharing of informationIncoming Outcoming
Albania - AL 2 -
Austria - AT 1 -
Bahamas - BS - 1
Belgium - BE 1 -
Bosnia Herzegovina - BA 1 -
Costa Rica - CR 2 -
Cyprus - CY - 1
Estonia - EE 1 -
France - FR - 1
Germany - DE 1 -
Guernsey - GG - 1
Ireland - IE 1 -
Italy - IT 13 35
Jersey - JE - 1
Kosovo - KO 1 -
Luxembourg - LU 1 -
Macedonia - MK 1 -
Moldova - MD 1 -
Nigeria - NG 2 -
Romania - RO - 1
Serbia - CS 2 -
Slovenia - SI 1 -
Spain - ES 1 2
Sri Lanka - LK 1 -
Switzerland - CH 1 2
Taiwan - TW 1 -
Thailand - TH 1 -
Turkey - TR 1 -
United Kingdom - GB 1 -
Venezuela - VE 4 -
The exchange of information with the foreign FIUs is carried out through a communication system provided by the Egmont Group called Egmont Secure Web which permits to safely ex-change information by electronic ways.
Requests of cooperation ans spontaneous sharing of information fron November 24, 2008
Incoming51,1%
Outcoming48,9%
36
3.7 International relationships
The exchange of information with foreign FIUs, both on the basis of specific written agree-ments for cooperation and on mutual terms, do not represent the only way of interrelation with foreign bodies on combating money laundering and terrorist financing.
Actually over 2009 the Republic of San Marino and more specifically FIA took part in several occasions of interrelation and exchange of experiences with international bodies, even with the non-governmental ones.
The Republic of San Marino – as a member of the European Council – regularly participates in the Moneyval Committee activities; within such activities the contribution of the Financial Intelligence Agency plays without any doubts an important role for its functions assigned by law and the AIF personnel’s experience on the principles and procedures adopted by such im-portant body.
As pointed out in the preface, in the previous year FIA led the delegations which took part in the periodic Moneyval plenary sessions which take place in Strasbourg and played a primary role in organizing the activities of planning and arranging the relationships and in verifying the conformity of the enhanced procedures.
Furthermore we point out that in July 2009 for the first time San Marino played host to the Training Seminar for evaluator, which is an important training event yearly arranged by Mo-neyval with the purpose of training and updating the FIU, Police Forces and Magistracy’s per-sonnel; such personnel shall be called by Moneyval to constitute the evaluators’ team for what concerns the procedures of mutual evaluation of the member Countries.
A large group of FIA employees and some representatives of the Police Forces and the Ma-gistracy of San Marino took part in the training event in July as well as in the previous events.
Furthermore FIA regularly participates in the Egmont Group plenary sessions, as the FIU of San Marino is a member of the group since 2005.
The Egmont plenary session, which took place in Doha (Qatar) in June 2009, permitted the FIA representatives to acknowledge the latest principles, world-wide legislative and operating developments on such matters and facilitated the start of new relationships with non-European FIU.
3.8 Training
The numerous innovations introduced with the new regulations and dispositions on com-bating money laundering and terrorist financing, the expected increase in the number of the subjects required to respect such regulations and the need to make the operating behaviour of the obliged parties as homogeneous as possible led FIA to organize training events for such subjects, even with the participation of external advisors.
The training events have been organized thanks to the interest and participation of the Associations of the financial intermediaries ( Bankers’ Association of San Marino, Association of financial and trust companies of San Marino) and the Professional Associations (Lawyers and Notaries, Chartered Certified Accountants), with whom FIA has constructively collaborated.
The following table shows the training activities carried out by FIA for the obliged parties. Furthermore we point out that the same FIA personnel took part in several training events for professional updating, since the subject continuously evolves.
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Training eventsSource: FIA - Financial Intelligence Unit of San MarinoPeriod: from November 24, 2008 to December 31, 2009
Training events2009 Organized by FIA or the rapporteur
is part of the FIA staffAttended by the
FIA staff Total
January - - -
February 3 1 4
March - 1 1
April 2 1 3
May - 1 1
June 1 - 1
July 1 1 2
August - - -
September 1 - 1
October 1 4 5
November - - -
December - - -
Total 9 9 18
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4. TRANSPORT OF MONEY AND SIMILARINSTRUMENTS ACROSS TRANSNATIONAL BORDERS
The Delegate Decrees 138/2008, 62/2009 and 74/2009 introduced and updated the obli-gations of any natural person entering or leaving the territory of the Republic of San Marino to declare the transport of cash and similar instruments in Euro or foreign currencies for a total amount exceeding € 10,000 or the equivalent value.
The Guard of the Rock has the task to control over such typology of obligations.The following tables shows the number of checks, the typologies of the committed brea-
ches and the pertinent sanctions imposed by the members of the Guard of the Rock or by FIA.
Transport of cash and similar instruments across transnational bordersSource: Polices forces and FIA - Financial Intelligence Unit of San MarinoPeriod: from October 31, 2008 to December 31, 2009
Year Controlscarried out (C)
Violationsascertained (V) % V/C Administrative
sanctions (eur)Amounts
involved (eur)2008 64 - 0,0% - -
2009 2 .988 13 0,4% 24.018 458.592
Breakdown of controls carried aout and violations ascertained per year
Controls carried out (C) Violations ascertained (V)
-
500
1.000
1.500
2.000
2.500
3.000
3.500
2008 2009
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Year 2008 Controlscarried out (C)
Violationsascertained (V) % V/C Administrative
sanctions (eur)Amounts
involved (eur)November 52 - 0,0% - -
December 12 - 0,0% - -
Total 64 - 0,0% - -
Year 2009 Controlscarried out (C)
Violationsascertained (V) % V/C Administrative
sanctions (eur)Amounts
involved (eur)January 12 2 16,7% 9.000 200.000
February 23 - 0,0% - -
March 20 1 5,0% 2.000 30.000
April 13 2 15,4% 250 25.000
May 31 - 0,0% - -
June 260 2 0,8% 10.000 120.000
July 419 1 0,2% 778 17.780
August 464 - 0,0% - -
September 450 1 0,2% 200 11.200
October 449 1 0,2% 1.000 20.000
November 437 3 0,7% 790 34.612
December 410 - 0,0% - -
Total 2.988 13 0,4% 24.018 458.592
Violations ascertained per natural person nationality and transnationaltransport directionSource: Polices forces and FIA - Financial Intelligence Unit of San MarinoPeriod: from October 31, 2008 to December 31, 2009
Nationality Incoming Outcoming TotalAlbania - AL 1 - 1
Italy - IT 3 9 12
Total 1 - 13
Amounts involved per instrument type
Cash80,5%
Otherinstruments
19,5%
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Transport of cash and similar instrumets across transnational bordersSource: Polices forces and FIA - Financial Intelligence Unit of San MarinoPeriod: from January 1, 2009 to December 31, 2009
Country Controls carried out (C) Violations ascertained (V) % V/CAcquaviva 304 2 0,7%
Gualdicciolo 304 2 0,7%
Borgo Maggiore 87 1 1,1%
Ventoso 87 1 1,1%
Chiesanuova 82 - 0,0%
Domagnano 108 - 0,0%
Torraccia 108 - 0,0%
Faetano 305 1 0,3%
Fiorentino - - -
Montegiardino 209 - 0,0%
Cerbaiola 209 - 0,0%
San Marino - - -
Serravalle 1.893 9 0,5%
Dogana 832 3 0,4%
Rovereta 564 6 1,1%
Falciano 110 - 0,0%
Galazzano 387 - 0,0%
Total 2 .988 13 0,4%
Violations ascertained per natural person nationality andtransnational transport direction
-123456789
10
Albania -AL Italy -IT
Incoming
Outcoming
Breakdown of controls carried out and violations ascertained per Country - year 2009
Controls carried out Violations ascertained
-200400600800
1.0001.2001.4001.6001.8002.000
Acquaviva Borgo Maggiore Chiesanuova Domagnano Faetano Montegiardino Serravalle
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5. TYPOLOGIES, METHODS AND TRENDS
Among the functions included in the FATF/GAFI and MONEYVAL’s mandate are the identi-fication of the methods of money laundering and terrorist financing and the definition as well as the description of the typologies of the above mentioned crimes, with the purpose of sugge-sting the appropriate measures to combat such cases.
In fact, the progressive development of the capital markets and their available instruments has led to an improvement of the money laundering and terrorist financing techniques toge-ther with the enhancement of the regulations and dispositions aimed at combating such cases.
FATF/GAFI and MONEYVAL monitor this operating evolution so that the qualified bodies periodically carry out a technical analysis (Judicial Authorities, Police Forces, Supervisory Autho-rities and FIUs of different Countries, with the collaboration of experts of International Organi-zations, such as the International Monetary Fund, the World Bank, Interpol and Egmont Group).
As a consequence, the international bodies qualified in such matters draw up reports on the various typologies, methods and trends of money laundering and terrorist financing in this per-spective and which FIA thought it advisable to collect in a specific section named “Typologies, methods and trends” in its website (www.aif.sm) in order to dispose them at the obliged parties’ disposal to increase their awareness on this matter.
The following are some cases analyzed by the Financial Intelligence Agency which describe by way of an example and not exhaustively some techniques carried out in order to conceal the illegal origin of the some funds by injection in the system of San Marino.
The operating schemes, the techniques, the areas as well as the most adopted behaviours in order to conceal the illegal origin of money deriving from the financial analyses carried out are schematically described.
Case 1
A and B have opened two fiduciary mandates with an intermediary of San Marino aimed at managing liquidities and characterized by the following movements: deposit of cash, disposi-tion of different foreign transfers and several cash withdrawals.
The acquired information and the financial analysis carried out led FIA to consider sound reasons to believe that the funds moved on the fiduciary mandate registered in A’s name were referable to B’s supposed illegal activities. In fact, on the basis of the obtained documentation, we can clearly deduce that the beneficial owner of the activities carried out on the mandate registered in A’s name was B, unlike what declared by the former during due diligence.
Furthermore, the suspect was increased by the ways of making deposits and subsequently this was confirmed by some news items, since B was under investigation abroad and a part of the hidden capital was found in San Marino.
Case 2
Mr A has opened an account with an intermediary, subsequently Mr B has requested the opening of a fiduciary mandate with the same intermediary aimed at transferring the amounts contributed by A.
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After analyzing the documentation and the financial movements, FIA could establish that the funds initially invested might be linked to a crime which had been carried out abroad few years earlier. Furthermore, it was possible to find a certain compatibility with the period of time in which the crime was committed. Finally, it was not possibile to find any commercial infor-mation which could otherwise justify the generated provision. Furthermore, FIA detected the probability that Mr B, since his family ties, was perfectly aware of the fact that the amounts be-longing to Mr A were the result of illegal activities.
Case 3
Mr Y and Z are the owners of two current accounts at the same bank. The movements of the current account opened in Y’s name consisted in cash deposit transactions and issue of bank drafts in addition to cash withdrawal. It was found that Mr Z, besides owing his own current account, was delegated to operate as a director on the current account opened in the name of the company K, which was afterwards cancelled further to a discharge in bankruptcy for “the impossibility to satisfy creditors”. It turned out to be anomalous that the director had transferred some funds of the company K to his own current account through withdrawal transactions and concomitant cash deposit of thousand euros shortly before, and then he transferred a part of the collected funds to the current account in Mr Y’s name seemingly difficult to find out.
Case 4
Mr A, a tradesman, had opened a current account in his name, on which he deposited seve-ral out-of-town cheques and cash. The bank, while monitoring the relationship, could find out that the commercial activities of Mr A resulted to be ceased, that is in liquidation.
Furthermore, among the transactions carried out by Mr A we noticed a transaction consi-sting in the withdrawal of cash from his current account and the concomitant requirement of opening several bearer’s bankbooks of low unit value in B’s name. Such behaviour led to believe that the amount and the deposited securities on the accounts of Mr A could have an illegal origin.
Moreover, after analyzing the statement of account, several deposited cheques resulted to be dishonoured on the first presentation. Such behaviour led FIA to believe that this kind of provision could be linked to assumptions of usury or extortion.
Schemes of operations
Requirement of opening current accounts in the name of Associations and Institutions for fund collection by third parties;
Requirement of foreign currency exchange;
Requirement of deposit certificates collection issued by foreign financial intermediaries;
Operativeness mostly characterized by crediting of funds through bank transfer from abroad and subsequent requirement of cash withdrawal;
Requirement of deposit of foreign cheques;
Operativeness mostly characterized by cash deposit and subsequent withdrawals;
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Operativeness mostly characterized by cheques deposit of various amounts not issued by inter-mediaries of San Marino and requirement of cash withdrawal;
Requirement of financing without or with unspecified real or personal guarantees;
Operativeness mostly characterized by crediting of funds through bank transfers deriving from abroad and subsequent transfer to fiduciary relations;
Operativeness mostly characterized by crediting of funds through bank transfers deriving from abroad and subsequent bank transfer to abroad, when withdrawing the remaining part or the issuing bank cheques and/or bank drafts is required;
Requirement of cash deposit of high amounts and subsequent bank deposits abroad;
Significant use of safe-deposit boxes after cash deposit and/or withdrawal.
Used techniques
Presumably false bills;
Submission of documentation not consistent with the required transactions;
Submission of documentation not consistent with the customer profile;
Submission of documentation relating to Donations and Inheritances;
Absent submission of documentation which permits to trace the commercial activity back to the operativeness of the relationship.
Reported economic sectors
Building industry/real estate
Vehicles
Waste disposal
Fuels
Distribution of machinery for food industry
Ferrous metals
Computers and telecommunication, informatics and electronic equipments
Electronics (mobile phones, watches, game consoles)
Financial/commercial counselling
Gambling
Feedstuff for pets
Beverage wholesale
Financial sector
Phone traffic
Oil and methane pipeline plant engineering
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Anomalous behaviour of the customer
Withholding to provide information or documentation attesting specific transactions;
Withholding to sign anti-money laundering forms;
Withholding to provide information for the fulfillment of the customer due diligence obliga-tions;
Persons known by the reporting person as “non grata”
Requirements of the customer aimed at evading the obligations set forth in the anti-money laundering regulations;
Inaccuracy and confusion of information provided by the customer;
Prejudicial information against the customer;
Discordant statements issued by the customer.
Customer’s documents
Justificative documentation on transactions which are clearly false;
Declarations of the customer which are not true further to verifications;
Declarations of the customer on the activity carried out which are not supported by any docu-mentations.
Indicators of anomalies mostly selected by the reporting subjects
Customers refusing or being unjustifiably reluctant to provide the required information needed to carry out transactions, declare their own activities, submit the records or other documenta-tion, report the relationships with other intermediaries, give information which, under normal circumstances, would qualify the customer to carry out bank, financial or insurance transactions;
Transactions of a considerable amount being unusual in comparison with those generally car-ried out by the customer, especially if there are not plausible economic and financial justifica-tions;
Cash withdrawal for significant amounts, unless the customer represents particular require-ments;
Frequent deposits or withdrawals of disproportionate amounts in comparison with the econo-mic availability and the activity carried out by the customer;
Accounts seemingly used for requirements which are not involved with the economic activity of the customer;
Relationships which show movements which are not justified by the activity carried out by the customer and which are characterized by:- frequent cheques deposits or offering of securities for discount, above all if in round figures,
with many endorsements, with other recurring elements, that is issue of bearer securities or on behalf of the drawer himself;
- calls and returns of unpaid amounts sometimes followed by a protest;- substantial balancing of debits and credits;
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Frequent transactions of the same kind, which are not justified by the activity carried out by the customer and in such a way to denote a disguising purpose;
Frequent and considerable transfer of amounts through bank transfers from or to abroad, espe-cially if carried out with finance institutions situated in geographical areas which are considered to be “offshore centres” and not justified by the customer’s activity;
Customers requiring to carry out transactions with unusual procedures, especially if characteri-zed by high complexity or of significant amount;
Transactions structured with procedures in order to avoid identifications and recordings;
Transactions carried out by a customer in the name or on behalf of third parties in case the re-lationships are not justified;
Customers requiring or holding relationships with an illogical configuration with the interme-diaries;
Transactions requested with manifestly incorrect or incomplete instructions, such as to consider the purpose to hide essential information, especially if they concern the subjects involved in the transaction;
Recourse to cash instead of the usual means of payment used by the customer;
Deposit of cash for considerable amounts, which is not justified by the economic activity of the customer;
Transactions frequently carried out by third parties on behalf of the owner who, without any reason, never appears personally;
The customer refuses or is unjustifiably reluctant to provide the required information needed to carry out professional services, declare the activity carried out, submit the requested docu-mentation, report the relationships with other professionals, provide any other information which, under normal circumstances, is acquired in the course of the professional service;
Current accounts which have not been moved for a long time and on which considerable de-posits and withdrawals are suddenly carried out, especially of cash for no apparent reason.
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FINANCIAL INTELLIGENCE AGENCY
ANNUAL REPORT2009
www.aif.sm
FINANCIAL INTELLIGENCE AGENCY BANCA CENTRALE DELLA REPUBBLICA DI SAN MARINO
Strada di Paderna, 2 c/o Centro Fiorina47895 Domagnano - Repubblica di San Marino
Tel. 0549 888180 - Fax 0549 888181www.aif.sm
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