Strasbourg, France – In a report published this month, the Council of Europe’s anti-money laundering agency Moneyval notes that although progress has been made in the last few years, the Czech Republic should take a more proactive approach to combat money laundering.
According to the report, the Czech Republic should be more active in launching and carrying out money-laundering investigations as soon as the first warning signs are identified. But the Moneyval agency also identifies numerous points of progress: the Czech Republic has carried out a thorough, transparent and realistic analysis of the risks linked to money laundering and terrorism financing, that banks “have an appropriate understanding” of the risks and that “legislative reforms and increased efforts in pursuing money laundering investigations represent a commendable progress achieved since the last evaluation”.
Moreover, Czech authorities are “active in cooperation with their foreign counterparts” and forms in international cooperation “are routinely used both spontaneously and upon request”. Finally , “Czech authorities have been active in relation to foreign requests, including those related to seizing and freezing assets”.
The Czech banking sector, which comprises 45 banking entities, remains largely in foreign hands: out of the 45 banks, 23 are foreign bank branches, and foreign owners controlled more than 93% of the assets of the Czech banking sector, according to the Council of Europe report. A vast majority of those (nearly 93%) are owned by EU countries banking entities.
While terrorist financing remains quite low and is well monitored in the Czech Republic, according to the Council of Europe report, money laundering remains more widespread and is often linked to fraud, corruption, tax crimes, phishing and in subvention fraud cases. According to a report published last year, thousands of Czech companies and corporate structures find ways to conceal the ultimate beneficial owners of a business.
Under a new EU regulation on anti-money laundering, EU member states were forced to establish registers of beneficial ownership. But in the Czech Republic, this register hasn’t been fully open to the public and is only available to the police or tax authorities.
In this year’s Corruption Perceptions Index released by Transparency International, the Czech Republic was hailed as “one of the key countries to watch moving forward” due to recent progress and ranked 38th least corrupt country in the world. But the international anti-corruption watchdog warned of “a series of recent scandals that paint a different reality on the ground”, including the case of Czech Prime Minister Andrej Babis accused of conflict of interest and misuse of EU funds.