COMMITTEE OF EXPERTS ON THE EVALUATION OF ANTI-MONEY LAUNDERING MEASURES AND THE FINANCING OF TERRORISM (MONEYVAL) MONEYVAL(2015)34 Anti-money laundering and counter-terrorist financing measures Armenia Fifth Round Mutual Evaluation Report December 2015 0 The Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism - MONEYVAL is a permanent monitoring body of the Council of Europe entrusted with the task of assessing compliance with the principal international standards to counter money laundering and the financing of terrorism and the effectiveness of their implementation, as well as with the task of making recommendations to national authorities in respect of necessary improvements to their systems. Through a dynamic process of mutual evaluations, peer review and regular follow-up of its reports, MONEYVAL aims to improve the capacities of national authorities to fight money laundering and the financing of terrorism more effectively. The fifth round mutual All rights reserved. Reproduction is authorised, provided the source is acknowledged, save where otherwise stated. For any use for evaluation report on Armenia commercial purposes, no part of this publication may be translated, was adopted by the reproduced or transmitted, in any form or by any means, electronic MONEYVAL Committee (CD-Rom, Internet, etc.) or mechanical, including photocopying, at its 49th Plenary Session recording or any information storage or retrieval system without prior (Strasbourg, 10 December permission in writing from the MONEYVAL Secretariat, Directorate 2015). General of Human Rights and Rule of Law, Council of Europe (F-67075 Strasbourg or [email protected]) 1 CONTENTS EXECUTIVE SUMMARY ............................................................................................................................................................. 4 Key Findings ............................................................................................................................................................................. 4 Risks and General Situation ................................................................................................................................................ 5 Overall Level of Effectiveness and Technical Compliance ..................................................................................... 5 Priority Actions ..................................................................................................................................................................... 10 Effectiveness & Technical Compliance Ratings ....................................................................................................... 12 MUTUAL EVALUATION REPORT ....................................................................................................................................... 14 Preface ...................................................................................................................................................................................... 14 CHAPTER 1. ML/FT RISKS AND CONTEXT ............................................................................................................ 15 ML/FT Risks and Scoping of Issues of Increased Focus ...................................................................................... 15 Materiality .............................................................................................................................................................................. 21 Structural Elements ............................................................................................................................................................ 22 Background and other Contextual Factors ............................................................................................................... 22 CHAPTER 2. NATIONAL AML/CFT POLICIES AND COORDINATION .......................................................... 32 Key Findings and Recommended Actions ................................................................................................................. 32 Immediate Outcome 1 (Risk, Policy and Coordination) ...................................................................................... 33 CHAPTER 3. LEGAL SYSTEM AND OPERATIONAL ISSUES ............................................................................. 41 Key Findings and Recommended Actions ................................................................................................................. 41 Immediate Outcome 6 (Financial intelligence ML/FT) ........................................................................................ 42 Immediate Outcome 7 (ML investigation and prosecution) .............................................................................. 53 Immediate Outcome 8 (Confiscation) ......................................................................................................................... 59 CHAPTER 4. TERRORIST FINANCING AND FINANCING OF PROLIFERATION ....................................... 65 Key Findings and Recommended Actions ................................................................................................................. 65 Immediate Outcome 9 (FT investigation and prosecution) ............................................................................... 66 Immediate Outcome 10 (FT preventive measures and financial sanctions) .............................................. 67 Immediate Outcome 11 (PF financial sanctions) ................................................................................................... 71 CHAPTER 5. PREVENTIVE MEASURES .................................................................................................................... 73 Key Findings and Recommended Actions ................................................................................................................. 73 Immediate Outcome 4 (Preventive Measures)........................................................................................................ 74 CHAPTER 6. SUPERVISION ........................................................................................................................................... 85 Key Findings and Recommended Actions ................................................................................................................. 85 Immediate Outcome 3 (Supervision) .......................................................................................................................... 86 CHAPTER 7. LEGAL PERSONS AND ARRANGEMENTS ..................................................................................... 94 Key Findings and Recommended Actions ................................................................................................................. 94 Immediate Outcome 5 (Legal Persons and Arrangements) ............................................................................... 95 CHAPTER 8. INTERNATIONAL COOPERATION ................................................................................................ 103 Key Findings and Recommended Actions .............................................................................................................. 103 Immediate Outcome 2 (International Cooperation) .......................................................................................... 103 TECHNICAL COMPLIANCE ANNEX ................................................................................................................................ 108 Recommendation 1 - Assessing Risks and applying a Risk-Based Approach .......................................... 108 Recommendation 2 - National Cooperation and Coordination ..................................................................... 111 Recommendation 3 - Money laundering offence ................................................................................................. 112 Recommendation 4 - Confiscation and provisional measures ....................................................................... 114 Recommendation 5 - Terrorist financing offence ............................................................................................... 116 2 Recommendation 6 - Targeted financial sanctions related to terrorism and terrorist financing ... 118 Recommendation 7 – Targeted financial sanctions related to proliferation ........................................... 121 Recommendation 8 – Non-profit organisations................................................................................................... 123 Recommendation 9 – Financial institution secrecy laws ................................................................................. 126 Recommendation 10 – Customer due diligence .................................................................................................. 127 Recommendation 11 – Record-keeping .................................................................................................................. 130 Recommendation 12 – Politically exposed persons ........................................................................................... 131 Recommendation 13 – Correspondent banking .................................................................................................. 132 Recommendation 14 – Money or value transfer services ................................................................................ 133 Recommendation 15 – New technologies .............................................................................................................. 133 Recommendation 16 – Wire transfers ..................................................................................................................... 134 Recommendation 17 – Reliance on third parties ................................................................................................ 136 Recommendation 18 – Internal controls and foreign branches and subsidiaries ................................. 136 Recommendation 19 – Higher-risk countries ....................................................................................................... 138 Recommendation 20 – Reporting of suspicious transaction .......................................................................... 139 Recommendation 21 – Tipping-off and confidentiality .................................................................................... 140 Recommendation 22 – DNFBPs: Customer due diligence ............................................................................... 140 Recommendation 23 – DNFBPs: Other measures ............................................................................................... 141 Recommendation 24 – Transparency and beneficial ownership of legal persons ................................ 141 Recommendation 25 – Transparency and beneficial ownership of legal arrangements ................... 146 Recommendation 26 – Regulation and supervision of financial institutions .......................................... 148 Recommendation 27 – Powers of supervisors ..................................................................................................... 150 Recommendation 28 – Regulation and supervision of DNFBPs ................................................................... 151 Recommendation 29 - Financial intelligence units ............................................................................................ 154 Recommendation 30 – Responsibilities of law enforcement and investigative authorities ............. 156 Recommendation 31 - Powers of law enforcement and investigative authorities ............................... 158 Recommendation 32 – Cash Couriers ...................................................................................................................... 161 Recommendation 33 – Statistics ................................................................................................................................ 166 Recommendation 34 – Guidance and feedback ................................................................................................... 167 Recommendation 35 – Sanctions ............................................................................................................................... 168 Recommendation 36 – International instruments ............................................................................................. 170 Recommendation 37 - Mutual legal assistance .................................................................................................... 170 Recommendation 38 – Mutual legal assistance: freezing and confiscation ............................................. 172 Recommendation 39 – Extradition ........................................................................................................................... 172 Recommendation 40 – Other forms of international cooperation ............................................................... 173 Summary of Technical Compliance – Key Deficiencies ..................................................................................... 178 3 EXECUTIVE SUMMARY 1. This report provides a summary of the AML/CFT measures in place in Armenia as at the date of the on-site visit (25 May to 6 June 2015). It analyses the level of compliance with the FATF 40 Recommendations and the level of effectiveness of Armenia’s AML/CFT system, and provides recommendations on how the system could be strengthened. Key Findings  Armenia has a broadly sound legal and institutional framework to combat money laundering (ML) and financing of terrorism (FT). Armenia’s level of technical compliance is generally high with respect to a large majority of FATF Recommendations.  Armenia is not an international or regional financial centre and is not believed to be at major risk of ML. The predicate offences which were identified by the 2014 national risk assessment (NRA) as posing the biggest threat are fraud (including cybercrime), tax evasion, theft and embezzlement. The findings of this assessment indicate that corruption and smuggling also constitute a ML threat. The real estate sector, the shadow economy and the use of cash all constitute significant ML vulnerabilities. Competent authorities have assessed and demonstrated an understanding of some, but not all, ML risks in Armenia.  The NRA concludes that the risk of FT is very low. Although Armenia shares a border with Iran, which is considered by the FATF to pose a higher risk of FT, the evaluation team found no concrete indications that the Armenian’s private sector and non-profit organisations (NPOs) are misused for FT purposes. There have never been any investigations, prosecutions and convictions for FT. There is an effective mechanism for the implementation of Targeted Financial Sanctions (TFS). No terrorist-related funds have been frozen under the relevant United Nations Security Council Resolutions (UNSCRs).  The financial intelligence unit (FIU) has access to a wide range of information sources and is very effective in generating intelligence for onward dissemination to LEAs. Law enforcement access to information is somewhat restricted by a combination of issues connected with the legislation dealing with law enforcement powers to obtain information held by financial institutions and law enforcement ability to successfully convert intelligence into evidence. Law enforcement authorities (LEAs) did not demonstrate that they make effective use of FIU notifications to develop evidence and trace criminal proceeds related to ML.  The number of ML investigations and prosecutions has increased in the period under review. However, it appears that LEAs target the comparatively easy self-laundering cases mainly involving domestic predicate offences. One ML conviction (described as autonomous) was secured, although the judiciary appears to have based its ruling on the admission that the predicate offence had been committed. Overall, law enforcement efforts to pursue ML are not fully commensurate with the ML risks faced by the country.  Seizure and confiscation of criminal proceeds, instrumentalities and property of equivalent value are not pursued as a policy objective. It is doubtful whether LEAs are in a position to effectively identify, trace and seize assets at the earliest stages of an investigation, since proactive parallel financial investigations for ML and predicate offences are not conducted on a regular basis.  The banking sector is the most important sector in terms of materiality. Banks understand the risks that apply to them according to the FATF Standards and the AML/CFT Law. However, they have not demonstrated that they have incorporated the risks identified in the NRA into their internal policies. The real estate sector, notaries and casinos pose a relatively higher risk compared to other DNFBPs. Their understanding of risk is limited. 4  The application of customer due diligence (CDD), record-keeping and reporting measures by financial institutions is adequate. Major improvements are needed by the DNFBP sector with respect to preventive measures.  The approach of the Central Bank of Armenia (CBA) to anti-money laundering/counter financing of terrorism (AML/CFT) supervision is to some extent based on risk. Developments in this area are on-going. Adequate procedures for the imposition of sanctions are in place. However, the level of fines could be improved. The supervision of the DNFBP sector was found to be in need of improvement relative to casinos and notaries, and inadequate relative to real estate agents, dealers in precious metals and stones, lawyers and accountants.  Most basic information on legal persons is publicly available through the State Register. All legal persons in Armenia are required to disclose the identity of their beneficial owners to the State Register upon registration and, inter alia, whenever there is a change in shareholding. Information on beneficial ownership of legal entities is also ensured through the application of CDD measures by banks.  While all the banks understand that they have to apply freezing of funds to proliferation financing and there is an innovative system in place in financial institutions to ensure that matches are detected, there is a concern that the legal framework based on the AML/CFT Law could be open to legal challenge. Coordination between the different competent authorities involved in this area needs to be further developed. Risks and General Situation 2. The 2014 NRA identifies swindling, theft, tax evasion, contraband and squandering/ embezzlement as posing the highest ML threat. The General Prosecutor’s Office indicated that, from its perspective, the highest risk of ML arises from fraud (including cybercrime), falsifying plastic cards and theft through ICT, embezzlement, theft, smuggling and drug trafficking. This is more or less the view of the FIU and other law enforcement authorities. The evaluation team identified corruption as also posing a ML threat. The level of foreign proceeds introduced into the Armenian financial system could not be determined with certainty, since little information was made available to the evaluation team. However, STR information suggests that attempts to launder proceeds from cybercrime and other ICT-related crime committed outside Armenia are not uncommon. The FMC has procedures in place to monitor cross-border movement of funds with subsequent analysis and comparison with applicable foreign trade indicators. There are no indications that the risk of FT faced by Armenia is any way elevated. 3. The large majority of funds from and to Armenia flow through the banking sector. In terms of materiality, this sector constitutes the biggest ML vulnerability to the Armenian private sector generally and financial sector particularly. The real estate sector, which involves various DNFBPs, including real estate agents and notaries, is considered to pose a relatively higher risk of ML. Casinos are also vulnerable to ML due to shortcomings in supervision and weaknesses in the application of preventive measures, although the fact that they do not provide certificates of winning (i.e. documentary basis for facilitating the laundering of illicit proceeds) certainly mitigates the potential for their use in ML. The large presence of the shadow economy, the use of cash and financial exclusion create a favourable environment for the commission of economic crime, especially tax evasion and related ML that could possibly detract from law enforcement efforts in detecting crime. 5 Overall Level of Effectiveness and Technical Compliance 4. Since the last evaluation in 2009, Armenia has made major improvements in terms of technical compliance with the FATF Recommendations. Armenia is largely compliant or compliant with most Recommendations. The ML offence, the confiscation regime, the FT offence, mechanisms for the freezing of terrorist assets, preventive measures and institutional measures and powers of the financial supervisor are all largely in place. The identification, assessment and understanding of ML risk need some improvement, although it is noted positively that Armenia has made significant efforts to conduct a national risk assessment. Some of the deficiencies in relation to law enforcement powers persist, particularly in relation to the legislation dealing with law enforcement powers to obtain information held by financial institutions and law enforcement ability to successfully convert intelligence into evidence. The mechanism to ensure transparency of legal persons should be further developed and the regulation and supervision of DNFBPs needs to be strengthened. The authorities should ensure that the legal provisions providing for the application of PF sanctions are clarified. 5. In terms of effectiveness, Armenia achieves substantial ratings in IO 2, 4, 5, 9, 10 and 11, moderate ratings in IO 1, 3 and 6 and low ratings in IO 7 and 8. Assessment of Risks, Coordination and Policy Setting (Chapter 2 - IO.1; R.1, R.2, R.33) 6. Armenia conducted its first ‘full scope’ NRA in 2014. The most positive aspect of this assessment is that it aggregates high-level information from all AML/CFT stakeholders, some of which had been previously analysed solely at institutional level. With respect to the assessment of ML threats and vulnerabilities, the information that was considered was not always complete and as a consequence some conclusions appear to be debatable. For instance, the threat of ML is based on the analysis of convictions for all predicate offences and ML, without considering the magnitude and significance of the overall criminal activity in Armenia. Nevertheless, the authorities are confident that the overall criminality rate is commensurate with the patterns and trends inferred from convictions. Consideration of the shadow economy and the use of cash are limited to recognising that these phenomena are present without linking the potential effects to other information, such as predicate criminality and the use of cash to purchase real estate. It is the view of the evaluation team that ML risks in Armenia might not be fully assessed and understood. The understanding of FT risks appears to be adequate. 7. Cooperation and coordination of national AML/CFT policies is conducted through the Interagency Committee on the Fight against Counterfeiting of Money, Fraud in Plastic Cards and Other Payment Instruments, Money Laundering and Terrorism Financing (‘Interagency Committee’). An action plan agreed by the Interagency Committee provides a foundation for addressing the ML/FT risks identified in the NRA. While operational cooperation between competent authorities appears to be sound, the coordination of strategies, particularly within the law enforcement sphere, does not seem to be sufficiently developed. Moreover, because the NRA does not properly identify and assess certain risks, the policies, objectives and activities of competent authorities do not fully address the ML risks present in country. In addition, it appears that important intelligence work being undertaken by the arms of government and law enforcement handling licensing and export control issues was not routinely being brought in the policy-making which is undertaken by the Interagency Committee. 8. The authorities have shared the results of the NRA with the private sector. The banking sector presented a relatively better understanding of risk to the evaluation team compared with other sectors. Even in the banking sector, however, the understanding differed. It was not common for financial institutions to go beyond the NRA conclusion for their own sectors when discussing risk even though the AML/CFT Law requires institutions to undertake a risk assessment of their business. 6 9. The exemptions and the instances where the application of simplified measures are permitted are based on the FATF Standards rather than being justified by the findings of the NRA, although these instances have been carefully considered by the Interagency Committee and do not contradict the findings of the NRA. Financial Intelligence, Money Laundering and Confiscation (Chapter 3 - IOs 6-8; R.3, R.4, R.29- 32) 10. The Financial Monitoring Centre (FMC), which is the FIU of Armenia, is the lead agency within the AML/CFT operational system. It has access to a very broad range of information and can request additional information from all reporting entities, regardless of whether the entity had previously submitted an STR. The FMC has in place advanced processes for the operational and strategic analysis of information and disseminates useful intelligence to law enforcement authorities. 11. The quality of STRs has improved, although reporting entities may be overlooking certain suspicious transactions and/or business activities due to potential overreliance on typologies and pre-defined indicators issued by the FMC. The level of reporting by banks appears to be adequate, but not for other relatively higher risk entities such as money remittance providers, casinos, real estate agents and notaries. Information on cash declarations made at the border is regularly communicated by the Customs Administration to the FMC, which process has been enhanced by the introduction of the Integrated Information System (IIS) providing a secure environment for the exchange of information and disclosures between all stakeholder public agencies. 12. Information that is subject to financial secrecy is available to law enforcement authorities under the Criminal Procedure Code (when it is required in relation to a suspect or an accused person) and the Law on Operational Intelligence Activities (without any limitation relative to a suspect or an accused). Nonetheless, the availability of certain operative measures to LEAs is subject to unduly burdensome conditions (e.g. only available in relation to grave and particularly grave crimes, thereby excluding basic ML). In practice, this limits LEAs’ ability to broaden the scope of an investigation by using the measures provided under the LOIA. 13. There is little evidence that intelligence, whether generated by the FMC or LE operative units, is used to a great extent to identify ML and to conduct financial investigations. Information is generally used to secure a conviction for predicate crimes, rather than to identify and trace criminal proceeds. The FMC intelligence by LEAs has been used on some occasions to identify and seize proceeds. 14. The authorities have increased their efforts in identifying ML offences. Nevertheless, since LEAs do not routinely conduct proactive parallel financial investigations, at least in relation to major proceeds-generating crimes, the potential for identifying ML cases is limited. It appears that LEAs still operate under the notion that concrete links between a specific predicate offence and the laundering of the funds need to be demonstrated. As a result, 12 out of the 13 ML convictions achieved in the period under review were self-laundering cases mainly involving domestic predicate offences. Only one autonomous ML conviction was achieved and, even there, the judiciary appears to have based its ruling on the admission that the predicate offence had been committed. No convictions for third party laundering were secured. Overall, law enforcement efforts to pursue ML are not fully commensurate with the ML risks faced by the country. For instance, ML connected to tax evasion, corruption and cybercrime does not appear to receive sufficient attention. 15. Armenia does not appear to pursue the seizure and confiscation of criminal proceeds, instrumentalities and property of equivalent value as a policy objective. It is doubtful whether LEAs are in a position to effectively identify, trace and seize assets at the earliest stages of an investigation, since proactive parallel financial investigations for ML and predicate offences are not conducted on a regular basis. Since the evaluation team was not presented with information on the estimated cost of reported criminal offences, it was not in a position to make a reasoned judgement on whether the 7 level of confiscated assets in Armenia is adequate. There is uncertainty among practitioners regarding the legal interpretation on the confiscation of indirect proceeds. There are some statistics on confiscation of cash and bearer negotiable instruments) at the borders. The systematic management of seized and confiscated property does not appear to have been addressed to a great degree. Terrorist Financing and Financing Proliferation (Chapter 4 - IOs 9-11; R.5-8) 16. There have been no investigations, prosecutions and convictions for FT. This seems to be in line with the risk of FT that Armenia faces. Armenian authorities confirm that comprehensive operational intelligence work is carried out by the National Security Service supported, whenever necessary, by full scope involvement of the FMC for consideration of financial aspects of relevant cases, to identify any FT implications relevant for the country in a timely manner. The legal framework for the criminalisation of FT is largely in line with international standards. 17. Targeted financial sanctions have been adequately implemented into the Armenian system, although no funds have been frozen to-date. Dedicated staff of the FMC checks designations on the UNSC website on a daily basis. The FMC has implemented innovative software which automatically updates financial institutions’ databases whenever new designations are made. 18. The number of non-profit organisations registered in Armenia amounts to around 9,000. However, in the view of the Armenian authorities, the overwhelming majority of these organisations do not fall within the definition of NPOs in the FATF Glossary (which, as assessed by the authorities, might amount to a few hundred only). While the authorities have not conducted a formal review of the sector to identify which subset of entities pose a higher risk of FT, the authorities demonstrated that they are in possession of information on the activities, size and other relevant features of the NPO sector. NPOs are to a large extent subject to requirements which ensure that their activities are transparent, all funds are fully accounted for and the beneficiaries are known. Supervision of this sector needs to be strengthened by allocating further resources. 19. Armenia is taking a number of very meaningful steps to address all the issues surrounding proliferation financing. Those involved at governmental level in licensing and export control of proliferation sensitive material seem well attuned to the risks, and are taking their responsibilities seriously. Intelligence and information from their work would benefit from being brought into the Interagency Committee for AML/CFT on a more regular basis. There is a system in place for PF sanctioning, and the evaluators understood that the private sector appreciated that the requirements of the relevant UNSCRs should be implemented. The evaluators concluded nonetheless that the legal regime based as it is on the AML/CFT Law could be open to possible challenge. This has been discussed with the Armenian authorities, who recognise that this issue, while not perceived by either the public or public sectors as an impediment to the effective implementation of PF-related requirements, could be quickly fixed. Preventive Measures (Chapter 5 - IO4; R.9-23) 20. Financial institutions demonstrated a good understanding of the risks which are applicable to them according to the FATF Standards and the high risk relationships and features specified in the AML/CFT Law and relevant regulations. However, financial institutions did not demonstrate that they have taken specific measures to integrate the risks identified in the NRA into their internal risk policies. The authorities confirm that, whereas such formal integration of NRA findings into the internal policies of financial institutions has not been carried out, the findings of supervision reveal that in practice these policies reflect the major ML/FT treats present in the country by means of relevant indicators and typologies of high risk. DNFBPs do not demonstrate adequate understanding of ML risks which are inherent to their activities, especially as far as real estate intermediaries and casinos are concerned. It is the authorities’ view that due to the under-developed status of the 8 DNFBP professions such as real estate intermediation, precious metals and stones dealership, as well as to the low level of social and economic involvement of lawyers, the materiality of DNFBPs in the country is limited. 21. The application of adequate CDD measures (including enhanced CDD) by financial institutions is good. DNFBPs verify the identity of their customers but there are significant gaps in some DNFBP sectors. There are also partial deficiencies in relation to foreign PEPs, although such customers are very rare. There are no measures in relation to domestic PEPs although a few firms have mitigating measures in relation to such PEPs. 22. The quality of STR reporting has improved. 99.9% of STRs are submitted by banks. The evaluation team expected to see a better STR output from MVTS given the risks usually associated with this sector. The authorities confirm that MVTS only have 0.3-0.5% share in the total amount of cross-border transfers (the remaining part transacted by banks), and that they operate under strict controls and below certain thresholds, which significantly reduces their STR reporting potential. No STRs have been submitted by DNFBPs. This is not consistent with the risks emanating from the real estate, notarial and casino sectors in particular. Supervision (Chapter 6 - IO3; R.26-28, R. 34-35) 23. Armenia has a comprehensive and robust licensing regime for all Core Principles financial institutions, MVTS and credit organisations. There are no measures in place to prevent criminals and their associates from holding, or being the beneficial owner of, a significant or controlling interest, or holding a management function in DNFBPs such as real estate agents, dealers in precious metals and stones, lawyers and accountants. 24. While the CBA demonstrates adequate understanding of ML/FT risks with respect to financial institutions, its practices and procedures are not demonstrably risk-based. The Financial Supervision Department of the CBA does not conduct a formal risk assessment either of the different financial sectors or of individual institutions. It relies on the results of the NRA and its close cooperation with the Financial Monitoring Center. Consideration of relevant factors such as specific client or product risks emanating from different sectors or individual institutions is not documented. 25. Overall, supervisory practices and processes of the CBA, while quite comprehensive in terms of prudential supervision, appear to apply a rule-based approach by examining all risks – including those related to ML/FT – with similar scope and depth. There is a lack of understanding of risk by DNFBP supervisors, although some of them have manuals and guidelines for the application of the risk-based approach (e.g. the MoF for supervising casinos). 26. Under the AML/CFT Law amended in October 2014, the FMC has been designated as the supervisor of real estate agents, dealers in precious metals and stones, accountants, TCSPs, lawyers and law firms. No supervisory regime has been implemented yet by the FMC. 27. The CBA has adequate procedures for the imposition of sanctions. However, the CBA has not demonstrated that it has used the sanctioning regime effectively, particularly since the volume of fines that have been imposed appears to be low. Sanctions are very rarely used by DNFBP supervisors for ML-related violations. 28. The CBA promotes the understanding of ML/FT risks and obligations to the private sector through feedback and guidance. There is almost no outreach to the private sector by DNFBP supervisors. Transparency of Legal Persons and Arrangements (Chapter 7 - IO5; R. 24-25) 29. All legal persons are required to be registered. Basic information is publically available and is, therefore, transparent. It appears that a combination of legal provisions and practice at the State 9