Last July, MONEYVAL’s European anti-money laundering experts made their report on Monaco public, with a positive overall assessment. Meet Marie-Pascale Boisson, Director of the Financial Network Information and Control Department.
What are the missions of SICCFIN (the Financial Network Information and Control Department)?
It is a financial intelligence unit (FIU) as per the FATF, which combines an additional supervision mission not necessarily found in our foreign counterparts, that can be managed in one administrative department given our country’s small size.
Functionally speaking, our work is divided into three separate but complementary missions.
The first is the core business of an FIU. As the central national authority specialised in combating money-laundering and terrorism financing (AML /CFT), SICCFIN is responsible for receiving and processing notifications of suspicious activities sent to it by professionals subject to the legal provisions, in addition to information provided by other national supervisory authorities or other foreign FIUs.
These notifications enable us to collect information on cases of suspected money-laundering. Since the events of 11 September 2001, FIUs have also been responsible for processing information relating to the financing of terrorism.
One of the peculiarities and difficulties of AML/CFT in Monaco stems from the fact that the suspect financial flows behind money laundering are mainly derived from predicate offences (drug trafficking, embezzlement, commercial fraud, scams and misappropriation of funds, insider trading etc.) committed abroad. These are offences which generate litigious funds that are then laundered and in many cases re-injected into the ‘clean’ economy.
This foreign origin difficulty is characteristic of many financial centres with a large international customer base. For the investigation we then need to question our foreign counterparts to learn about these primary offences necessary for the qualification of money laundering. That complicates and prolongs the related processing time.
If the investigation and analysis of the gathered information reveal proven suspicions, SICCFIN will then forward a file to the public prosecutor. However the professional’s notification itself is never passed on, as the law imposes the utmost confidentiality as part of an evident concern to protect the informant.
The judicial authorities can then decide whether or not to continue; indeed Monaco’s magistrates are very aware of the fight against money-laundering.
Our second mission is to oversee subjected professionals (financial and non-financial sectors) to ensure that they effectively implement their legal obligations. Professionals to be controlled are notified of the arrival of a SICCFIN operation a few days in advance. The duration of the on-site check varies according to the establishment’s activity and size, from less than one day for an estate agent to several weeks for a bank.
Once on-site, the SICCFIN agents work by retrieving files, sampling and surveying customer and transaction records. Overall, checking internal procedures and their effectiveness is performed around the two main anti-money laundering pillars of KYC (Know Your Customer) and KYT (Know Your Transaction). That broadly means that professionals’ obligations are based on a good knowledge of their customer, the source of the funds used, and checking the consistency of the customer’s banking and financial transactions with his or her work, financial situation and economic and wealth context. The institutions then adapt their vigilance according to the established profile.
Are visited institutions not concerned about these checks?
Undoubtedly it is not very pleasant to have the SICCFIN agents arrive: the feeling is certainly the same for checks by other administrative authorities or external audits. But although these visits may be feared, they are often considered a useful necessity and constitute a sought-after indicator as they enable the institution to measure its degree of compliance. Sometimes – mainly in the financial sector – they are even requested.
For banks, for example, this is easily explained by the fact that most Monegasque banks are part of large international banking groups which ask to consult the SICCFIN report, especially as because of international standardisation and harmonisation these Groups’ compliance standards are usually close to Monaco’s legal standards or even identical with them.
So nowadays, the internal procedures which professionals implement are an integral part of the corporate culture, leading them to make use of appropriate staff and technical and logistics resources.
Our contact people in financial institutions are mainly Compliance Officers, while some directors and executives may also be named SICCFIN correspondents.
For financial institutions and CSP service centres the checks are performed every three years. For other industries such as estate agents or jewellers, for example, once the first wave of checks is completed their frequency will be five-yearly, unless there are specific problems.
SICCFIN also has a support function, specifically for non-financial professions which are less familiar than financial institutions with AML/CFT. For example, we recently organised a meeting with almost all of Monaco’s estate agents. Legal obligations must first be understood, in order that they be complied with. Consultants and other consulting firms also provide training sessions.
What do the ‘checked’ parties risk?
For default or significant breach, the law provides for a range of administrative sanctions ranging from a simple warning (the only sanction which SICCFIN can impose directly) to official reprimand, financial penalties, or prohibition from carrying out certain operations or even temporary suspension or operating licence withdrawal. These sanctions are imposed by the Minister of State following a reassessment of the case. Warnings excepted, the sanctions may also be officially published in the ‘Journal de Monaco’.
Several sanctions have already been imposed (official reprimands and financial penalties). But punishment is not SICCFIN’s primary goal. In the vast majority of cases a check operation has a role to support the professional, which is preventive before being punishing. It is designed to identify strengths and pinpoint weaknesses, with the aim of then making recommendations so that improvements can be made prior to the next check. The next check will then verify whether or not the professional has implemented the required corrections in the meantime.
What is your third mission?
It is international action: SICCFIN represents Monaco in international organizations specialising in AML/CFT (MONEYVAL, EGMONT GROUP) or combating corruption (GRECO).
MONEYVAL is an organ of the Council of Europe, made up of experts delegated by each country who assess its members’ compliance with the European and international regulations designed to combat money laundering and the financing of terrorism, as well as the effectiveness of their implementation.
This assessment takes place in an original way, according to a mutual peer review principle. SICCFIN is thus called upon to assess other countries. At the end of each assessment, MONEYVAL sends the national governmental authorities its recommendations on the improvements to be made to their system.
One of the major challenges of MONEYVAL’s next assessment rounds, bolstered by the coming into force of the 4th European money-laundering Directive in May, is that each country must implement its own national risk approach (NRA). That will identify the main AML/CFT risks each country faces, in order to align its financial, human and logistics resources with those national risks pinpointed as priorities. Professionals will be closely involved in this government action. The World Bank is supporting Monaco in this approach, scheduled to begin this autumn. Monaco needs to complete its NRA for its 5th round assessment in 2019.
In addition, SICCFIN regularly attends meetings of the EGMONT Group. This is a non-governmental organization with an operational vocation, which aims in particular to foster and strengthen cooperation among its members. It brings together the FIUs of 151 countries in all continents. Being part of it allows the sharing of experience on subjects such as data security, the dangers of virtual currencies such as bitcoins, the FIUs’ relations with the judicial authorities, and means of detection of financing of terrorism etc.
As part of this Group, SICCFIN has signed bilateral agreements on administrative cooperation with over 40 foreign counterparts.
International cooperation is a key element of FIU effectiveness. It has become crucial, given the diversification and internationalization of money laundering networks, and indispensable for tackling the ever-increasing and continually reinvented growing complexity of the methods money launderers use. Combating money laundering is a challenge and we must not give up.
Our task is a complex one which requires both human and financial resources to deal with this increasingly inventive and sophisticated economic crime. Combating money laundering is becoming a full-time job. There are 14 members in our team, mainly with legal, economic and banking backgrounds. Some have compliance or financial auditing experience. We also make occasional use of external experts and former Bank of France examiners.
What is your relationship with AMAF?
We have a good dialogue with the financial centre’s professionals. In particular we enjoy close relations with AMAF, and on its request we organize informal meetings several times a year. Given the size of our country, having an ongoing dialogue between professionals and the administration is relatively easy. And that proximity creates real effectiveness.
