Czech Republic

New Documents

The Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism published a follow-up report for the Czech Republic, which re-rates the nation on its compliance with Financial Action Task Force Technical Recommendations 13 and 19.

The Czech National Bank published its 2019 annual report, highlighting activities in financial institution supervision, market stability and monetary policy over the past year, including efforts to improve the anti-money laundering and counterterrorist financing regime.

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Important Facts

  • The U.S. State Department classifies the Czech Republic as a jurisdiction of concern. The country’s central location in Europe and open market economy leave it vulnerable to money laundering. Primary sources of laundered assets include fraud and tax evasion related to diesel and fuel oils, gas, gold and alcohol. “Carousel trading” is popular, which involves the transfer of funds among multiple companies through fictitious invoices, wages and benefit payments. Another common source of illicit funds is online consumer fraud. Virtual currency fraud has also been noted. Organized criminal groups target Czech financial institutions for laundering activity, most commonly through financial transfers. Links between organized crime and money laundering are present in the activities of foreign groups, especially those from the former Soviet republics, the Balkans region and Asia. Banks, investment companies, real estate agencies, currency exchange offices and gaming establishments all launder criminal proceeds. Fraud and tax evasion money is laundered by groups from various European Union states and the Middle East. The Czech Republic is home to a significant black market for tobacco products, as well as pirated products from Asia. Criminal groups use funds from contraband smuggling to purchase real properties, which they use for business activities. There has been an increase in the number of cyber attacks on banking networks recently, according to Czech police. Cases have involved the use of false identities, fake banking websites and other schemes. The government has expressed concern about potential abuse of digital currencies by criminals in connection to tax evasion, money laundering, terrorist financing, and sanctions circumvention.. Development and investment companies, real estate agencies, currency exchange offices, casinos, gaming establishments, antique shops, pawnshops, restaurants, and taxi companies have also been used to launder criminal proceeds.
  • KYC Covered Entities: Banks, currency exchanges, insurance companies, and postal license holders; securities dealers and exchanges; gaming enterprises; attorneys, trusts, and company service providers; realtors, notaries, accountants, tax advisors, and auditors; pawnshops and dealers of precious metals and stones and of secondhand goods, including vehicles
  • STR Covered Entities:  Banks, currency exchanges, insurance companies, and postal license holders; securities dealers and exchanges; gaming enterprises; attorneys, trusts, and company service providers; realtors, notaries, accountants, tax advisors, and auditors; pawnshops and dealers of precious metals and stones and of secondhand goods, including vehicles
  • Enhanced Due Diligence Procedures for PEPs: Foreign: Yes; Domestic: No
  • Money Laundering Criminal Prosecutions/Convictions: Prosecutions: 148 (2014); Convictions: 20 (2014)
Source: 2016 International Narcotics Control Strategy Report (INCSR)

Rankings

FATF i | 2013 Methodology

Technical Effectiveness
Compliant : 4 High : 0
Largely Compliant : 23 Substantial : 3
Partially Compliant : 13 Moderate : 8
Non-Compliant : 0 Low : 0

BASEL i

Rank : 112/141
Score : 4.29/10

TRANSPARENCY INTERNATIONAL i

Rank : 44/180
Score : 56/100

Tax Justice Network i

Rank : 67/133
Score : 55/100