Slovakia RISK & COMPLIANCE REPORT DATE: March 2018

Slova kia RISK & COMPLIANCE REPORT DATE: March 2018 KNOWYOURCOUNTRY.COM Executive Summary - Slovakia Sanctions: None No FAFT list of AML Deficient Countries C omplia nc e with FATF 40 + 9 Rec ommenda tions US Dept of Sta te Money La undering a ssessment C orruption Index (Tra nspa renc y Interna tiona l & W.G .I.)) Fa iled Sta tes Index (Politic a l Issues)(Avera ge Sc ore) Medium Risk Areas: Major Investment Areas: Agriculture - products: gra ins, pota toes, suga r beets, hops, fruit; pigs, c a ttle, poultry; forest produc ts Industries: meta l a nd meta l produc ts; food a nd bevera ges; elec tric ity, ga s, c oke, oil, nuc lea r fuel; c hemic a ls a nd ma nma de fibers; ma c hinery; pa per a nd printing; ea rthenwa re a nd c era mic s; tra nsport vehic les; textiles; elec tric a l a nd optic a l a ppa ra tus; rubber produc ts Exports - commodities: ma c hinery a nd elec tric a l equipment 35.9%, vehic les 21%, ba se meta ls 11.3%, c hemic a ls a nd minera ls 8.1%, pla stic s 4.9% (2009 est.) Exports - partners: G erma ny 22.4%, C zec h Republic 14.6%, Pola nd 8.6%, Hunga ry 7.8%, Austria 7.1%, Fra nc e 5.6%, Ita ly 4.9%, UK 4.1% (2012) Imports - c ommodities: ma c hinery a nd tra nsport equipment 31%, minera l produc ts 13%, vehic les 12%, ba se meta ls 9%, c hemic a ls 8%, pla stic s 6% (2009 est.) Imports - partners: G erma ny 18.5%, C zec h Republic 17.9%, Russia 9.9%, Austria 7.7%, Hunga ry 7.2%, Pola nd 6%, South Korea 4.3% (2012) 1Investment Restrictions: Foreign a nd domestic priva te entities ha ve the right to esta blish a nd own business enterprises a nd enga ge in a ll forms of remunera tive a c tivity in Slova kia . In theory, c ompetitive equa lity is the sta nda rd by whic h priva te enterprises c ompete with public entities. In a ddition, businesses a re a ble to c ontra c t direc tly with foreign entities. 2Contents <a href="#5_0">S</a><a href="#5_0">e</a><a href="#5_0">c</a><a href="#5_0">t</a><a href="#5_0">i</a><a href="#5_0">o</a><a href="#5_0">n 1 - B</a><a href="#5_0">a</a><a href="#5_0">c</a><a href="#5_0">k</a><a href="#5_0">g</a><a href="#5_0">r</a><a href="#5_0">o</a><a href="#5_0">und ......................................................................................................................</a><a href="#5_0">.</a><a href="#5_0">4 </a><a href="#6_0">S</a><a href="#6_0">e</a><a href="#6_0">c</a><a href="#6_0">t</a><a href="#6_0">i</a><a href="#6_0">o</a><a href="#6_0">n 2</a><a href="#6_0"> </a><a href="#6_0">- An</a><a href="#6_0">t</a><a href="#6_0">i</a><a href="#6_0"> </a><a href="#6_0">– M</a><a href="#6_0">o</a><a href="#6_0">n</a><a href="#6_0">e</a><a href="#6_0">y </a><a href="#6_0">L</a><a href="#6_0">a</a><a href="#6_0">u</a><a href="#6_0">nde</a><a href="#6_0">r</a><a 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href="#6_2">ns....................................................................................... 5 </a><a href="#7_0">K</a><a href="#7_0">e</a><a href="#7_0">y </a><a href="#7_0">F</a><a href="#7_0">in</a><a href="#7_0">d</a><a href="#7_0">i</a><a href="#7_0">ngs from la t</a><a href="#7_0">e</a><a href="#7_0">s</a><a href="#7_0">t Mutua l Eva lua tion R</a><a href="#7_0">e</a><a href="#7_0">po</a><a href="#7_0">r</a><a href="#7_0">t </a><a href="#7_0">(</a><a href="#7_0">2011): ............................................................ 6 </a><a href="#7_1">US D</a><a href="#7_1">e</a><a href="#7_1">pa </a><a href="#7_1">r</a><a href="#7_1">t</a><a href="#7_1">m</a><a href="#7_1">ent of </a><a href="#7_1">S</a><a href="#7_1">ta te</a><a href="#7_1"> </a><a href="#7_1">Mon</a><a href="#7_1">e</a><a href="#7_1">y </a><a href="#7_1">L</a><a href="#7_1">a unde</a><a href="#7_1">r</a><a href="#7_1">ing a ss</a><a href="#7_1">e</a><a href="#7_1">s</a><a href="#7_1">s</a><a href="#7_1">m</a><a href="#7_1">ent (</a><a href="#7_1">I</a><a href="#7_1">NC SR) ................................................ 6 </a><a href="#11_0">R</a><a href="#11_0">e</a><a href="#11_0">po</a><a href="#11_0">r</a><a href="#11_0">ts.................................................................................................................................................... 10 </a><a href="#13_0">Int</a><a href="#13_0">e</a><a href="#13_0">r</a><a href="#13_0">n</a><a href="#13_0">a tiona l Sa nc tions........................................................................................................................ 12 </a><a href="#14_0">Bri</a><a href="#14_0">b</a><a href="#14_0">e</a><a href="#14_0">r</a><a href="#14_0">y & C </a><a href="#14_0">o</a><a href="#14_0">r</a><a href="#14_0">ru</a><a href="#14_0">p</a><a href="#14_0">t</a><a href="#14_0">i</a><a href="#14_0">o</a><a href="#14_0">n............................................................................................................................. 13 </a><a href="#14_1">C o</a><a href="#14_1">r</a><a href="#14_1">ru</a><a href="#14_1">p</a><a href="#14_1">t</a><a href="#14_1">i</a><a href="#14_1">o</a><a href="#14_1">n a nd G ove</a><a href="#14_1">r</a><a href="#14_1">n</a><a href="#14_1">ment </a><a href="#14_1">T</a><a href="#14_1">ra </a><a href="#14_1">n</a><a href="#14_1">s</a><a href="#14_1">p</a><a href="#14_1">a </a><a href="#14_1">r</a><a href="#14_1">e</a><a href="#14_1">nc y</a><a href="#14_1"> </a><a href="#14_1">- Repo</a><a href="#14_1">r</a><a href="#14_1">t</a><a href="#14_1"> </a><a href="#14_1">b</a><a href="#14_1">y </a><a href="#14_1">U</a><a href="#14_1">S Sta te D</a><a href="#14_1">e</a><a href="#14_1">pa </a><a href="#14_1">r</a><a href="#14_1">t</a><a href="#14_1">m</a><a href="#14_1">ent .................... 13 </a><a href="#16_0">S</a><a href="#16_0">e</a><a href="#16_0">c</a><a href="#16_0">t</a><a href="#16_0">i</a><a href="#16_0">o</a><a href="#16_0">n 3</a><a href="#16_0"> </a><a href="#16_0">- Ec</a><a href="#16_0"> </a><a href="#16_0">onomy .......................................................................................................................</a><a href="#16_0">.</a><a href="#16_0">1</a><a href="#16_0">5 </a><a href="#16_1">Ba nking ................................................................................................................................................... 15 </a><a href="#17_0">Stoc k Exc ha nge .................................................................................................................................... 16 </a><a href="#18_0">S</a><a href="#18_0">e</a><a href="#18_0">c</a><a href="#18_0">t</a><a href="#18_0">i</a><a href="#18_0">o</a><a href="#18_0">n 4</a><a href="#18_0"> </a><a href="#18_0">- Inv</a><a href="#18_0">e</a><a href="#18_0">s</a><a href="#18_0">t</a><a href="#18_0">m</a><a href="#18_0">ent</a><a href="#18_0"> </a><a href="#18_0">C</a><a href="#18_0">l</a><a href="#18_0">im</a><a href="#18_0">a</a><a href="#18_0">t</a><a href="#18_0">e </a><a href="#18_0">.</a><a href="#18_0">.....................................................................................................</a><a href="#18_0">.</a><a href="#18_0">1</a><a href="#18_0">7 </a><a href="#0_0">S</a><a href="#0_0">e</a><a href="#0_0">c</a><a href="#0_0">t</a><a href="#0_0">i</a><a href="#0_0">o</a><a href="#0_0">n 5</a><a href="#0_0"> </a><a href="#0_0">- </a><a href="#0_0">G</a><a href="#0_0">o</a><a href="#0_0">ve</a><a href="#0_0">r</a><a href="#0_0">nm</a><a href="#0_0">e</a><a href="#0_0">n</a><a href="#0_0">t..................................................................................................................</a><a href="#0_0">.</a><a href="#0_0">4</a><a href="#0_0">2 </a><a href="#0_1">S</a><a href="#0_1">e</a><a href="#0_1">c</a><a href="#0_1">t</a><a href="#0_1">i</a><a href="#0_1">o</a><a href="#0_1">n 6</a><a href="#0_1"> </a><a href="#0_1">- </a><a href="#0_1">T</a><a href="#0_1">a</a><a href="#0_1">x</a><a href="#0_1">.</a><a href="#0_1">.................................................................................................................................</a><a href="#0_1">.</a><a href="#0_1">4</a><a href="#0_1">4 </a><a href="#0_1">M</a><a href="#0_1">e</a><a href="#0_1">t</a><a href="#0_1">hodology </a><a href="#0_1">a</a><a href="#0_1">n</a><a href="#0_1">d Sourc </a><a href="#0_1">e</a><a href="#0_1">s </a><a href="#0_1">.</a><a href="#0_1">..............................................................................................................</a><a href="#0_1">.</a><a href="#0_1">4</a><a href="#0_1">7 </a>3Section 1 - Background Slova kia 's roots c a n be tra c ed to the 9th c entury sta te of G rea t Mora via . Subsequently, the Slova ks bec a me pa rt of the Hunga ria n Kingdom, where they rema ined for the next 1,000 yea rs. Following the forma tion of the dua l Austro-Hunga ria n mona rc hy in 1867, la ngua ge a nd educ a tion polic ies fa voring the use of Hunga ria n (Ma gya riza tion) resulted in a strengthening of Slova k na tiona lism a nd a c ultiva tion of c ultura l ties with the c losely rela ted C zec hs, who were under Austria n rule. After the dissolution of the Austro-Hunga ria n Empire a t the c lose of World Wa r I, the Slova ks joined the C zec hs to form C zec hoslova kia . During the interwa r period, Slova k na tiona list lea ders pushed for a utonomy within C zec hoslova kia , a nd in 1939 Slova kia bec a me a n independent sta te a llied with Na zi G erma ny. Following World Wa r II, C zec hoslova kia wa s rec onstituted a nd c a me under c ommunist rule within Sovietdomina ted Ea stern Europe. In 1968, a n inva sion by Wa rsa w Pa c t troops ended the efforts of the c ountry's lea ders to libera lize c ommunist rule a nd c rea te "soc ia lism with a huma n fa c e," ushering in a period of repression known a s "norma liza tion." The pea c eful "Velvet Revolution" swept the C ommunist Pa rty from power a t the end of 1989 a nd ina ugura ted a return to democ ra tic rule a nd a ma rket ec onomy. On 1 Ja nua ry 1993, the c ountry underwent a nonviolent "velvet divorc e" into its two na tiona l c omponents, Slova kia a nd the C zec h Republic . Slova kia joined both NATO a nd the EU in the spring of 2004 a nd the euro zone on 1 Ja nua ry 2009. 4Section 2 - Anti – Money Laundering / Terrorist Financing FATF status Slova kia is not on the FATF List of C ountries tha t ha ve been identified a s ha ving stra tegic AML defic ienc ies Compliance with FATF Recommendations The la st Mutua l Eva lua tion Report rela ting to the implementa tion of a nti-money la undering a nd c ounter-terrorist fina nc ing sta nda rds in Slova kia wa s underta ken by the Fina nc ia l Ac tion Ta sk Forc e (FATF) in 2011. Ac c ording to tha t Eva lua tion, Slova kia wa s deemed C omplia nt for 4 a nd La rgely C omplia nt for 18 of the FATF 40 + 9 Rec ommenda tions. It wa s Pa rtia lly C omplia nt or Non-C omplia nt for 4 of the 6 C ore Rec ommenda tions. MoneyVal Plenary - 1st June 2017: Fourth round follow up: a pplic a tion by the Slova k Republic to be removed from regula r follow-up The Sec reta ria t presented its a na lysis on the Slova k Republic ’s a pplic a tion to be removed from regula r follow-up proc ess under the 4th round follow-up. Sinc e the a doption of the 4th round MER, the Slova k Republic ha s ta ken a number of mea sures with a view to a ddressing the rema ining shortc omings identified in respec t of the key a nd c ore rec ommenda tions. However, there still rema in defic ienc ies rela ted to R.26 a nd SR.III. At the 52nd Plena ry in Dec ember 2016, the Plena ry c onsidered tha t the Slova k Republic wa s not yet in a position to be removed from regula r follow-up due to the fa c t tha t a number of defic ienc ies under some key rec ommenda tions rema in. Therefore, the Plena ry invited the Slova k Republic to provide a further follow-up report a t the 53rd Plena ry a nd seek then remova l from the regula r follow-up proc ess. The Slova k Republic ha s ma de progress with rega rd to SR.III, with the new “Ac t on the implementa tion of the interna tiona l sa nc tions” c overing the freezing of a ssets in the event of c ontrol or possession of a ssets. The defic ienc ies rela ted to the timely a mendment of lists published under UNSC R 1267 ha ve however not yet been a ddressed. Mec ha nisms for c onsidering requests for freezing from other c ountries a nd proc edures for de-listing a nd unfreezing ha ve been inc luded in the new Ac t. However, some defic ienc ies still rema in. With rega rd to Rec ommenda tion 26, a proposa l for orga nisa tiona l c ha nges rela ted to the position of the FIU within the Polic e Forc e wa s prepa red. Despite initia l positive feedba c k from the Presidium of the Polic e Forc e, the la tter a uthority’s ma na gement refused the request in ea rly 2017. As no forma l a c tions ha ve been ta ken sinc e the a doption of the 4th round MER, the c onc erns ra ised therein rela ting to the wea k forma l position of the FIU in the polic e struc ture rema in. No forma l sa fegua rds were introduc ed to ensure the FIU’s opera tiona l independenc e a nd a utonomy. Dec ision ta ken 5The Plena ry dec ided to move the Slova k Republic into enha nc ed follow-up a nd a pply step 1 under the MONEYVAL C omplia nc e Enha nc ing Proc edures. In doing so, the Plena ry took into a c c ount the severity of the outsta nding defic ienc ies (mostly under R.26 a nd SR.III) a nd the fa c t tha t the 4th round MER of the Slova k Republic wa s a dopted in September 2011, i.e. more tha n five a nd a ha lf yea rs a go. The Slova k Republic wa s requested to report ba c k to the Plena ry on progress ma de in Dec ember 2017. Key Findings from latest Mutual Evaluation Report (2011): Slova kia ena c ted on 1 September 2008 a new Ac t No. 297/2008 C oll. on the Prevention of Lega lisa tion of Proc eeds of C rimina l Ac tivity a nd Terrorist Fina nc ing tra nsposing the Third EU Money La undering Direc tive, a nd Implementing Direc t ive. Overa ll, the new la w ha s brought the Slova k preventive AML/C FT system broa dly into line with the FATF sta nda rds. Nota bly it esta blished a c lea r lega l ba sis for reporting suspi c ions of fina nc ing of terrorism, whic h wa s missing a t the time of the la st eva lua tion. Even though no forma l a c tion pla n (a t polic y level) a iming a t reviewing the implementa tion of AML/C FT polic ies domestic a lly wa s a dopted by the G overnment a fter the a doption of the 3 rd round mutua l eva lua tion report (MER) for the implementa ti on of the rec ommenda tions, most of the elements of the a c tion pla n a s set out in the 3 rd round MER a ppea r to ha ve been a ddressed a nd signific a nt progress ha s c ontinued to be ma de sinc e the a doption of the 3 rd round MER in September 2006. The eva lua tors were not a dvised of a ny spec ific AML /C FT risk a ssessment underta ken sinc e the la st eva lua tion. Nonetheless, they were a dvised tha t there is a signific a nt threa t from domestic orga nised c rime investing its proc eeds overwhelming ly within the Slova k ec onomy. Other preva lent ec onomic a nd fina nc ia l c rimes inc lude offic ia l c orr uption, theft of vehic les, ta x eva sion, fra ud, a nd smuggling. The a uthorities c onsider the TF risk to be low. The ma jor improvement with rega rd to the fight a ga inst terrorist fina nc ing sinc e the a doption of t he 3 rd round MER ha s been the inc rimina tion of fina nc ing of terrorism offenc e a s a n a utonomous off enc e whic h is broa dly in line with the interna tiona l sta nda rds, though some issues, a s not ed benea th, rema in outsta nding.

Slovakia RISK & COMPLIANCE REPORT DATE: March 2018

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