SMFSC Finds Gaps in Corporate Finance Crime Oversight

The San Marino Financial Standard Council (SMFSC) — a financial self-regulatory association dedicated to promoting transparency, honesty, and responsibility in global finance — has identified significant weaknesses in financial crime oversight across corporate finance firms, following a recent supervisory assessment.

The review found that while most firms recognise the importance of compliance, many fail to apply effective controls to prevent money laundering, market abuse, and other forms of financial misconduct.

“Strong financial crime oversight is not optional — it is essential to market integrity,” the Council said.
“Corporate finance firms play a critical role in capital markets, and gaps in their systems create vulnerabilities that can be exploited by bad actors.”

Key Findings from the Review

The SMFSC’s analysis highlighted several recurring issues among firms involved in corporate advisory, underwriting, and mergers and acquisitions (M&A) activities:

• Inadequate risk assessments of clients and transactions;
  
• Weak due diligence frameworks, especially in cross-border deals;
  
• Failure to identify politically exposed persons (PEPs) and beneficial owners accurately;
  
• Insufficient monitoring of unusual transactions or suspicious activity;
  
• Limited board oversight and accountability for anti-financial crime programmes.
  

These shortcomings suggest that some firms prioritise deal execution over compliance governance, exposing both themselves and investors to reputational and regulatory risks.

SMFSC’s Expectations and Recommended Actions

In response to these findings, the SMFSC is calling on all corporate finance firms to review and strengthen their internal systems for detecting and preventing financial crime.
The Council’s recommendations include:

• Conducting comprehensive client and transaction risk assessments before engagement;
  
• Implementing enhanced due diligence measures for complex or high-value deals;
  
• Ensuring senior management accountability through clear governance structures;
  
• Integrating real-time monitoring tools for suspicious activity detection;
  
• Providing specialised staff training focused on financial crime risks in corporate finance.
  

“A robust compliance culture must start at the top,” the Council added.
“Leaders must set the tone that integrity matters as much as profitability.”

Commitment to Industry Collaboration and Self-Regulation

As part of its self-regulatory mission, SMFSC will work with corporate finance firms, auditors, and professional associations to raise standards and share best practices.
The Council will also launch a compliance benchmarking programme in 2026 to assess improvements and identify areas requiring further support.

In addition, SMFSC plans to update its guidelines on anti-money laundering (AML) and counter-terrorism financing (CTF) to better reflect the evolving risks facing corporate finance professionals.

“Our goal is not just enforcement but empowerment,” the Council said.
“By helping firms build better systems, we strengthen both the market and the reputation of San Marino’s financial sector.”

Reinforcing the Link Between Transparency and Stability

The Council reaffirmed that preventing financial crime is fundamental to preserving market integrity and investor trust.
Corporate finance firms act as the bridge between businesses and capital markets — and therefore must uphold the highest standards of ethical and professional conduct.

SMFSC concluded that effective self-regulation, backed by transparency and accountability, remains the most sustainable path to preventing financial misconduct and ensuring a resilient financial system.

“Weak oversight erodes confidence,” SMFSC warned.
“We expect every firm to act decisively — because protecting the integrity of finance protects the integrity of the economy.”