San Marino risks scoring an ‘own goal’ in attempting to suppress discussion on a very murky report

In November last Nicola Muccioli, the Director of San Marino’s Financial Intelligence Agency (AIF) and Chair of the Council of Europe’s MONEYVAL Committee produced a report on a bank account opened by the Bulgarian company Starcom in a bank in San Marino. The report which is anything but balanced or objective has significance outside San Marino’s compact borders.

The Banca di San Marino affair in which the Muccioli report plays a key role raises fundamental questions about the wisdom of progressing with the Association Agreement between the EU and San Marino.

The background

Mr. Muccioli’s report is part of a chain of events set in motion when a church-based charity, Ente Cassa di Faetano, decided to sell its stake in Banca di San Marino (BSM).

In January 2025 Starcom, a major Bulgarian holding company with €1.4 billion in assets and operations across 11 countries tabled a binding offer to ECF for 51% of the BSM shares. The offer was unanimously approved by the ECF Board in February 2025. In March 2025 ECF shareholders ‘greenlit’ amendments to the Articles of Association to allow for the sale by a supermajority.

Starcom established San Marino Group (SMG) to handle the acquisition. An account was opened in Banca di San Marino in the name of the San Marino Group to fund the acquisition process. A formal agreement for the purchase of the BSM shares was signed in May 2025. Following this, a ‘confirmatory deposit’ of €1.425 million was paid by SMG to ECF and €13.57m was lodged in the SMG account in Banca di San Marino.

The Chairman of ECF praised the “transparency and absolute correctness” of the negotiations, noting direct contacts with the Central Bank.

At the end of May an application seeking approval for the acquisition was submitted to the Central Bank of San Marino. In late October the Central Bank rejected the application.

The San Marino Group (SMG) and Starcom decided, unsurprisingly, to withdraw the funds lodged in BSM: roadblocks emerged. Initially “technical glitches” prevented access to the account. The problem could not be resolved because the relevant manager was ‘working from home’. Next, SMG was told it could not transfer the funds from its account in a single transaction: a limit of €0.5m per transaction would apply and there could be no more than three transfers per day. When these transfer arrangements were put in operation BSM officials who had been dealing with SMG flagged concerns about the “suspicious haste” of the transfer efforts to San Marino’s Financial Intelligence Agency (AIF). The AIF suspended all transactions on the account. The suspension notice served on Banca di San Marino was not directly communicated to SMG. While issued on 29th October the notice was ‘backdated’ to 24th October, the date on which the Central Bank decided not to allow the sale of BSM to go ahead giving retrospective cover to BSM’s failure to meet any transfer requests submitted by SMG.

Intriguingly, only part of the funds that Starcom transferred to San Marino were actually frozen. The €1.425 million paid to ECF was not affected. There has been no explanation as to why funds in the SMG account were treated differently than money paid to ECF.

Report from the Director of AIF

The report produced by Muccioli in his capacity as Director of AIF is in many ways more bizarre than the events that preceded it. Questions arise about its accuracy, balance and objectivity. Much of the data used in it is from questionable and unverified sources. A striking feature of the report is the ambiguity of the language used. Text is framed in language that seems intended to shield the author from responsibility for the report’s conclusions.

The analysis of the funding raised for the share purchase arrangements is particularly questionable. Legitimate financial transactions are portrayed in a manner that questions objectivity. Confusion is also evident. At one point the report seems to confuse Euroins Bulgaria with Euroins Romania. Overall the report’s ‘analysis’ of funds coming into the BSM account seems focused more on constructing a negative narrative than on facts. Much of the discussion in the report is based on self-reinforcing assumptions.

When Starcom transferred funds to the SMG bank account in Banca di San Marino the sources of funds were disclosed to BSM compliance issues do not seem to have been raised. Compliance checks were run on the funds being transferred to the BSM account by the bank Starcom used in Bulgaria. That bank, a subsidiary of one of the EU’s largest banking groups operates robust anti money laundering and due diligence procedures. Again, no compliance issues were raised.

Major questions about objectivity arise about other parts of Muccioli’s report. The report devotes pages of space to headline-grabbing reports that accused the Hamburg-based Varengold Bank of creating a financial centre for Iranian terrorism.” Varengold was fined by German regulators in 2025 for delaying the filing of Suspicious Activity reports. It was not charged with money laundering or terrorist financing. Muccioli suggests that “ according to the information available” Varengold Bank AG belonged to companies in the Starcom group. This suggestion is incorrect. Starcom held shares in the bank but never owned it. A basic check would have established the facts.

Varengold wrote to the Central Bank of San Marino pointing out that it was not involved in any capacity – financial, operational, consultative, supervisory or otherwise – in the acquisition process of the stake in BSM. The correspondence was shared with Mr. Muccioli who has not reacted publicly to the rebuttal.

Two questions arise from Muccioli’s discussion on Varengold Bank. First, if the Sammarinese authorities had money laundering concerns about the funding to buy BSM shares why were the funds admitted into San Marino? Were the German or Bulgarian authorities alerted to the concerns second? Given Mr. Muccioli’s role in MONEYVAL, a failure to alert the Bulgarian or German authorities raises some potentially embarrassing questions.

Serious questions about judgement arise from a part of the report focused on a company that Starcom interacted with when raising funds for the BSM acquisition. Muccioli writes “according to recent intelligence information in the possession of the writer – one of the directors of a Bulgarian company” – the company and the person are named – “is linked to reports of crimes dating back to 1996 and 2000 in relation to ( apparently) petty theft.”

The event Muccioli referenced occurred when the person named was a teenager. The ‘petty theft’ involved picking cherries from an orchard. The boy was not charged, a small fine was paid, but the incident was recorded in his police dossier.

Two questions arise: the first concerns the morality of using the actions of a minor’s actions from 30 years earlier to raise a ‘red flag’ to halt a business transaction in 2025. A second question is: How did Mr. Muccioli acquire the information? His position with the FIA provided no right to access the activities of a Bulgarian teenager in the 1990s. How did the information come into his possession and was any abuse of position involved?

The FIA report contains a very skewed discussion relating to Euroins Romania a subsidiary of Euroins Insurance Group (EIG) – one of the largest independent insurance groups operating in Central and South Eastern Europe – whose operating licence was revoked in 2023 in highly contentious circumstances.

Mr Muccioli cites a request for a ‘market entry’ check from the Central Bank as the basis for referencing Euroins Romania. His report mentions online articles about Euroins Romania. It makes no effort to establish the veracity or context of the articles, fails to mention any of a myriad of other articles on the case, overlooks the fact that the position taken by the Romanian regulator was contested by Bulgaria’s Financial Supervision Commission and by reports produced by leading actuarial consultants. It makes a passing reference to an intervention by the European Bank for Reconstruction and Development, without providing detail and ignores a case before the International Centre for Settlement of Investment Disputes (ICSID) or the fact that ICSID rejected Romania’s attempt to terminate the case in October 2025, ruling that the arbitration would proceed.

Threats and intimidation

The Muccioli report has all the hallmarks of a document put together for a negative purpose. The authorities in San Marino have gone to extraordinary lengths to suppress discussion on it or the BSM case.

An event held in the Brussels Press Club on 4 February has produced a hysterical reaction. San Marino has labelled the open live streamed discussion – to which it was invited – as “intimidation”. Its primary judicial body escalated the attack on 6 February, labelling discussion on the BSM case as an “attack on the integrity and freedom of the state” and threatened to pursue “new and more serious charges” against San Marino citizens and foreigners alike, promising unspecified “precautionary measures”. The legitimate exercise of free speech – protected under EU law – was characterised as “serious criminal conduct.”

These tactics evoke authoritarian regimes – North Korea comes to mind – not a prospective EU partner. They clash irreconcilably with the fundamental values of the EU as set out in the Treaty on European Union. The crude attempts to threaten EU citizens’ rights to freely express their views and to engage with their elected representatives are repugnant wherever one stands on the political spectrum.

Article 2 of the Treaty on European Union lists the fundamental values of the EU. Those values are part of the EU acquis. Before being granted access to the EU single market which San Marino is seeking it must demonstrate that it aligns with the EU acquis. Threatening EU citizens for daring to exercise their right to freely express their views could prove to be a serious ‘own goal’ for San Marino.

Caption: A Google maps image of San Marino’s Financial Intelligence Agency (AIF).