sou · H9B342 · 2021-06-01 00:00:00 — AML/CFT and supervision is included in its responsi- bilities. 3.The AML/CFT supervision is a sub-unit of the Compliance and Inspections division of the FSA and covers all financial markets, including banking, insurance, pension, securities, payment services, e-money and virtual assets. In addition there are super- visory divisions for these markets. The AML/CFT unit works in close cooperation with other colleagues from these divisions and thus all supervisory divisions follow the same internal procedures. 4.8 full-time equivalent staff work on AML/CFT issues. 5.Since the adoption of the new AML act in 2019, sanctions now in- clude daily fines, administrative fines, suspension of the board of direc- tors and manager and the revocation of an FI’s operating licence. Administrative sanctions can be applied by the Central bank for AML/CFT breaches, as high as 800 million ISK or amount to as much as of the obliged entity’s gross turnover according to its last approved financial statement or of the last approved con- solidated financial statement if the obliged entity is part of a group. The Central bank has started to apply these sanctions and had its first case in 2020. 6.As in the Central bank can refrain from intervening with administrative fines if the infringement is negligible or excusable. How- ever, in all cases where deficiencies are identified the Central bank makes a decision regarding the breach and demands corrective actions. 7.During the last 5 years the FSA has conducted around 100 inspec- tions. Most of these inspections have led to remarks or recommen- dations and in many cases demand for corrective action. One of these cases was finalised with a settlement with the obliged entity. 1.AML/CFT supervision of most non-financial actors is conducted by the Financial Intelligence unit (FIU), formerly of the Estonian and and from the 1st of January 2021 the FIU is an independent government agency. However, lawyers and notaries are supervised by and the , respectively. The Tax and is responsible for licensing and super- vising casinos. 2.The FSA (Finantsinspektsioon) is responsible for /CFT supervision of the financial sector, except virtual asset service providers and currency exchange offices which are supervised by the FIU. 3.The FSA has created a separate department for AML/CFT super- vision in the beginning of 2019. The department is now named the AML Department. From the beginning of 2021, the AML Depart- ment is also in charge of supervision of financial institutions for their compliance with requirements under financial sanctions regimes. The AML Department cooperates with supervision dur- ing authorisation process and is in charge of assessment of internal policies and procedures of any potential market participant from the perspective of AML/CFT and financial sanctions’ requirements. The AML Department also provides input during the SREP process and cooperates with supervision during assessment of governance. Finantsinspektsioon has a yearly strategy, which all departments follow. All departments have their own internal procedures based on their separate functions. Functions are not divided by markets, but more on the area of supervision. As such and in relation to super- vision (PR, HR and other supporting functions not included), in addition to the AML Department Finantsinspektsioon is comprised of Legal Department (among other functions, Legal is in charge of fit and proper procedures), Risk and Analysis Department, Report- ing and Information Department, Supervision Department, Enforcement Department, Funds and Insurance Risk Department, Corporate Governance Department, Innovation Depart- ment and Financial Sector Infrastructure Department. 4.Seven staff members work full-time at the AML Department at the FSA. From 2021 seven additional full-time employees have been allocated to the AML Department and the positions are in the process of being filled. 5.Whenever Finantsinspektsioon finds breaches of AML/CFT obli- gations, as a result of on-site inspections or otherwise, it extends an administrative procedure to remediate the breaches (issue a precept), provided supervised entity has failed to rectify such breaches or if any other circumstances require such activity. In case of non-performance of the precept by the supervised entity, Finantsinspektsioon may issue a pecuniary penalty payment up to the level prescribed by law until the precept is duly performed. For financial institutions, the maxi- mum penalty payment in the event of failure to comply or improper compliance with a precept is: •in the case of a natural person, up to the first time and up to any next time in order to force the person to perform one and the same duty or obligation, but not more than in total; •in the case of a legal person, up to the first time and up to any next time in order to force the person to perform one and the same duty or obligation, but not more than the higher of or 10 per cent of the total annual turnover of the legal person according to the latest available annual accounts approved by its management body. In addition, Finantsinspektsioon has the right to start a misde- meanour process (sub-class of penal law process; “criminal proce- dure”-light) to issue a decision or proposal for pecuniary penalty for committing concrete misdemeanours as set forth in the (penal)law. In the latter case, if supervised entity does not agree with the penalty, it has the right to refer the case to general court. The penalty for AML/CFT violation in the misdemeanour process committed by a legal person is a fine of up to 400 000euros per misdemeanour. There are several misdemeanours enacted in the AML Act. AML/CFT violations may also initiate fit and proper – assessments. 6.Issuing a precept is in the discretion of Finantsinspektsioon. Precept as an administrative act and measure must be appropriate, necessary and proportionate to the stated objectives. The appropriateness, neces- sity and proportionality need to be substantiated and thoroughly described in the decision. If it is not necessary to issue a precept to remedy violations or to refrain from certain activities, Finants- inspektsioon may decide not to issue one. The FSA may also only ask an Action Plan from a supervised entity. If a misdemeanour has been committed, misdemeanour proceedings generally must be initiated. Nevertheless, the misdemeanour proceedings may be terminated if: •the person subject to the proceedings is not culpable to a high de- gree and there is no public interest in continuing the proceedings; •the person subject to the proceedings has voluntarily compensated for or remedied the harm caused by the misdemeanour; •the person subject to the proceedings has undertaken to participate in a community programme or •the juvenile subject to the proceedings has undertaken to have recourse to a conciliation service or has assumed another appro- priate obligation. 7.2016–2020, Finantsinspektsioon has finalized 22 AML/CFT inves- tigations (onsite inspections). Of these onsite inspections 3 resulted in the withdrawal of an activity licence, 2 resulted in on-going crimi- nal proceedings, 1 resulted in a fine of 1 mln EUR, 5 resulted in a precept and remaining investigations ended with an Action Plan or no deficiencies were identified. Many inspections ended with mana- gers or employees being withdrawn from their duties. 1.A number of sectoral supervisors are responsible for the supervision of non-financial sectors in : Three self-regulatory organisations supervises: –sworn advocates – ; –sworn notaries – ; –sworn auditors and commercial companies of sworn auditors – enue Service in part regarding application of sanctions. Administrators of insolvency proceedings: the association “process” and the in the part regarding the imposition of sanctions. The gambling sector is supervised by LGSI (Lotteries and gambling supervision inspection). supervises transactions involving cultural monuments and persons operating in handling of art and antique articles by importing them into or exporting them, storing or trading in them. The SRS () is the designated supervisor for remaining sectors: outsourced accountants, tax advisors, independent providers of legal services, company service providers, real estate agents, persons trading in means of transport, precious metals, precious stones, cash collection service providers. 2.The FCMC is the AML/CFT supervisor of most parts of the finan- cial sector for AML/CFT issues including supervision shared with the ECB. , however, supervises cur- rency exchange offices. supervises consumer credit and debt recovery service providers. SRS supervises other obliged entities that are not a subject to FCMC supervision and provide the following services: –credit services, including financial leasing, if provision of services is not subject to licensing; –issuance of guarantees and such other letters of commitment by which an obligation is imposed; –advising the in issues of financial nature; –cash collection service; –virtual currency exchange services. 3.There is a separate department within the FCMC, responsible for AML and sanctions compliance. The Money Laundering Prevention and Sanctions Department is composed of 3 divisions (, Non-bank audit for most of on-site supervision, Support and Regu- lations Division for off-site supervision and drafting of legal frame- work). The Money Laundering Prevention and Sanctions Depart- ment experts maintain a continuous and close cooperation with colleagues from other supervision departments. 4.Capacity of the FCMC AML/CFT supervision has been strength- ened gradually year by year since 2016 when there were 6 employees exercising functions on the AML/CFT and sanctions issues. At the end of 2018 number of employees in the Money Laundering Preven- tion and Sanctions Department reached 20. In order to increase the presence in high risk banks based on identified risks in 2019 8 posi- tions were opened in the Money Laundering Prevention and Sanc- tions Department totalling 28 employees in . In comparison, licensing consists of five members. AML/CFT supervision of foreign currency cash exchange companies are carried out by the members of of as well as other authorised representatives (overall 11 persons). 5.The FCMC may express a public announcement by indicating the person liable for the violation and the nature of the violation, issue a warning, to impose a fine on a person (natural or legal) liable for the violation in the amount of up to 00 000, to suspend or discontinue the activity (including to suspend or cancel the licence (certificate) or to cancel the entry in the relevant register, to suspend economic activity, to apply a prohibition on changes in the registra- tion in the commercial register for reorganisation of a commercial company and change of shareholders) and to give orders to credit institutions or payment service providers regarding partial or com- plete suspension of settlement operations of the obliged entity, to set a temporary prohibition on a person liable for the violation to fulfil the obligations specified for him or her by the obliged entity; to im- pose an obligation to perform certain action or refrain therefrom, to impose an obligation on the obliged entity to dismiss the person liable for the violation from the position held, to impose a fine on a legal person in the amount of up to 10 per cent of the total annual turnover according to the latest approved financial statement, drafted, ap- proved and audited, if necessary, in accordance with the laws and regulations in the field of preparation of annual statements binding to the credit institution or financial institution, to impose a fine of up to 000 000 on the official, employee or a person who, at the time of committing the violation, has been liable for the perfor- mance of a specific action upon assignment or in the interests of the credit institution or financial institution. Sanctions that can be applied to all obliged entities are listed in AML/CFT 78 (). 6.In accordance with the principle of legality specified in Article 7 of the Administrative Procedure and Article 10 of the , the institution must act in accordance with legal norms, the meaning and purpose of the mandate. It means that each state institution has its own competence specified in regulatory enactments, outside which it is not entitled to act. Consequently, the FCMC informs that it monitors the compliance of the activities of credit institutions with the provisions of the and regulatory enactments subordinate to it, AML/CFT and on International Sanctions and Sanctions of the Republic of . The FCMC can refrain from intervening against companies or individuals in case an infringement does not fall under FCMC competence. 7.Summary of main supervisory findings relate to deficiencies in ICS and management of risks inherent to institution with regards to CDD (incomplete, shortcomings in documentation), ECDD, identi- fication of actual UBO, failure to report . In most cases elaboration of remediation plans is required. The FCMC issues recommendations, guidelines, also regulations to address the identified shortcomings and to state requirements for improvement. 27 inspections in banks, 38 inspections in banks, 23 inspections in banks, 4 full scope on-site 3 full scope on-site 5 full scope on-site 8on-site inspections carried out by independent audit 3inspections in non- banking institutions 12on-site inspections carried out by independent audit 4inspections in non-banking institutions 10on-site inspections carried out by independent audit From 2016-2020 FCMC has imposed monetary sanctions to banks in 17 cases in total of . From 2018-2020 amount of pecuniary sanctions imposed by the FCMC was . Sanctions Applied to Natural Persons: During examinations FCMC examine also responsibility of AML board member and AML officer and in set of cases sanctions are imposed. FCMC has powers to impose sanctions to natural persons and from 2015 until 2020 decision on suspension has been applied to five offi- cials, fine has been applied to five persons, warnings issued for 8 persons. (See also infographic on FCMC progress in AML/CFT field.) In 2018 BoL has carried out 40 inspections in 29 foreign currency cash exchange companies, 23 of inspections were on-site inspections, inclu- ding 3 inspections focused on compliance with the requirements of the laws and regulations in the field of ML. In 2018 BoL imposed cor- rective measures against 7 foreign currency cash exchange companies. In 2019 BoL has carried out 18 inspections in 13 foreign currency cash exchange companies, 15 of inspections were on-site, including 8 inspections focused on compliance with the requirements of the laws and regulations in the field of AML/CFT. BoL carried out less in- spections than before, but all on-site inspections carried out by BoL were more focused on compliance with the requirements of the laws and regulations in the field of AML/CFT. BoL imposed corrective measures against 7 foreign currency cash exchange companies. In 2020 BoL carried out 7 inspections in 7 foreign currency cash ex- change companies, but 4 inspections are still being conducted in 2021. All inspections were focused on compliance with the requirements of the laws and regulations in the field of AML/CFT. BoL imposed cor- rective measures against 7 foreign currency cash exchange companies. Based on fit and proper requirements, in 2018, the () refused to register a special permit (license) based on unknown source of funds invested in the company’s share capital. In relation of serious infringements in the field of AML/CFT. In 2019 CRPC have made decisions to terminate 1 license and do not allow relicensing (prolonging) 1 license. Also in 2020 CRPC have made 2 decisions to suspend licenses and 1 decision of denying relicensing (prolonging). In 2020 CRPC took 4 decisions imposing fines in total of . Total amount AML/CFT inspections covered: 2019 – 197 offsite (146 on consumer credit and 51 on debt recovery service providers) and 13 onsite (9 on consumer credit and 4 on debt recovery service providers), 2020 – 131 offsite (91 on consumer credit and 40 on debt recovery service providers) and 12 onsite (9 on consumer credit and 3 on debt recovery service providers). These inspections are related with full amount ICS inspections, fit and proper requirements, beneficial ownership, risk assessment quality, checks on the origin of funds invested in core capital. 1.The GCA supervises casinos, gambling companies, and lottery compa- nies. The Bar association and the Chamber of Notaries are responsible for supervising lawyers and notaries, respectively. The Lithuanian Assay Office () has a responsibility to supervise traders in metals and precious stones. The Lithuanian Chamber of Auditors has a re- sponsibility to supervise auditors. The Chamber of Judicial Officers is the supervisory authority for judicial officers (bailiffs). The Depart- ment of Cultural Heritage Protection supervises traders in movable cultural goods and/or antiques. The FIU is responsible for supervising all of the above mentioned obliged entities, and in addition to that real estate brokers, accountants, traders in cash over , virtual currency exchange operators, depository virtual currency wallet operators, free zones. 2.The Central Bank (BoL) is responsible for AML/CFT supervision of the financial sector. According to the Lithuanian AML/CFT law, FIU is also considered as supervisory authority of financial institutions (e.g. credit providers are under supervision of FIU, not BoL). Other functions of the BoL include regular central bank functions, as well as and other supervision of the financial sector. 3.There is a separate AML division, which forms a part of the Finan- cial Market supervision services of the BoL. Similarly to the Swedish FSA, BoL Financial market supervision service has an integrated strategy for all its supervision, and all super- visory thus follow the same internal procedures. AML unit maintain a continuous and close cooperation with colleagues from other super- vision departments including banking supervision, e-money and pay- ment institutions supervision, also closely cooperates with licencing division (evaluates internal controls and procedures of institutions that apply for a license). 4./ej svar/ 5.The range of sanctions for non-compliance that can be used against banks and other supervised financial institutions include warnings, monetary fines, suspension (or limitation) of activities, publication of penalties and removal of a manager/compliance officer. In some cases, depending on the nature and severity of the infringe- ment, mandatory instructions or order to remove deficiencies might be issued. The amount of monetary fines in some cases might amount to as much as of turnover (aligned with the requirements of AMLD4). The same range of sanctions may be applied by the FIU. 6.Although exact situations are not explicitly defined in the law how- ever before intervening BoL has to consider nature and severity of the infringement as well as relevant, mitigating and aggravating circumstances established in the legal acts and based on that it might come to the decision that in certain cases the investigation can be finalised without taking further actions and (or) issuing recommen- dations might appear to be sufficient. Overall the circumstances in practice would be similar as those mentioned by Swedish FSA. 7.Please find all the used sanctions by the BoL here: 1.There are six independent AML/CFT supervisors for different groups of obliged entities: 1.Dutch Central Bank (). () is the independent Dutch central bank and member of Single Supervisory Mechanism of the Eurozone. It also acts as the and integrity supervisor for banks and other (financial) institutions in accordance with the Wft, the Wwft, the Wtt 2018, and the Sanctions Act. DNB monitors the compliance with AML/CFT legislation and regulations by a range of institutions: banks, credit institutions, life insurance com- panies, exchange offices, payment institutions (e.g., money transfer offices, credit card companies), virtual asset service providers, trust and company services providers, safe custody service providers and casinos (the latter until 2016). 2.The Authority for the Financial Markets (AFM). The Dutch Authority for the Financial Markets (AFM) is responsible for super- vising the operation of the financial markets. This means that the AFM supervises the conduct of the entire financial market sector: savings, investment, insurance, loans, pensions, capital markets, asset management, audit and financial reporting. The AFM is respon- sible for monitoring AML/CFT compliance by (managers of) alter- native investment funds, (managers of) undertakings for collective investment in transferable securities (UCITS), investment firms and financial service providers providing intermediary services in life insurance contracts. 3.BFT (Financial Supervision Office) is tasked with supervising, for example, (junior) civil-law notaries, lawyers and independent legal advisers, tax advisors, registered accountants, accountants and administration consultants, and any other independent financial economic advisers. The BFT is also responsible for the comprehen- sive supervision of civil-law notaries and process servers. 4.Tax and AML/CFT Supervision Office (BTWwft). The Tax and AML/CFT Supervision Office (Toezicht Wwft,) is responsible for the AML/CFT monitoring of traders or brokers in high-value goods, i.e., goods worth in excess of € 10 000. This group includes dealers or traders in assets such as gold, jewellery, yachts, cars, art and antiques, as well as real estate brokers, real estate surveyors, pawnbrokers, and natural or legal persons that provide their or registered office to another person. 5.Netherlands Gaming Authority (Ksa). The Gaming Authority (Kansspelautoriteit, Ksa) is the governance body, super- visor, and regulator of games of chance. The Ksa’s tasks are to regulate legal supply, to prevent gambling addiction, illegality and crime (related to gambling), and to protect and inform consumers. In 2016, the Ksa took over the AML/CFT supervision of casinos from DNB. 6.The Deans of the Bar (NOvA). The Bar (, NOvA) is the professional organisation of the legal profession. The NOvA was established by the Advocates Act 1952, which governs the profession of lawyers. Pursuant to this law, the lawyer is required to be a member of the NOvA. The NOvA may lay down rules for the professional practice, including as concerns the financial administration and continuous training. The Wwft, too, applies to lawyers. The Deans (Presidents) of the 11 districts of the Bar act as supervisors of the profession, including for AML/CFT purposes. They supervise about 17,300 lawyers and law firms. Certain professionals and practitioners can also have disciplinary measures and sanctions imposed on them by the relevant professional organisations. This power is laid down by law and applies to, inter alia, lawyers, civil-law notaries, and accountants. The FI sector also has a number of self-regulatory AML/CFT measures in place, such as the general banking terms and conditions that describe the rules of conduct between banks and their . 2.Financial supervision including supervision is a shared responsibility of the ECB, the DNB and the AFM. The latter two are responsible for AML/CFT supervision of the financial sector. 3.DNB has centralised integrity supervision (which encompasses more than AML/CFT supervision) in a separate division. Other supervisors have dedicated staff or units within their supervision departments. Of the six supervisors mentioned above, five have an integrated super- vision strategy. Only BTWwft is established specifically for AML/CFT supervision.