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France-Polynesia: Adopting Best Practices for Anti-Money Laundering and Combating the Financing of Terrorism

In a bid to strengthen financial integrity and stability in France-Polynesia, banks operating in the region are being urged to adopt best practices for anti-money laundering (AML) and combating the financing of terrorism (CFT).

The Importance of Effective AML/CFT Policies

Effective AML/CFT policies and measures cannot be overstated. Money laundering and related underlying crimes, as well as terrorist financing and proliferation financing, pose significant threats to financial stability and international security.

  • These crimes can have far-reaching consequences, including:
    • Destabilizing “hot money” flows
    • Banking crises
    • Ineffective revenue collection
    • Broader governance weaknesses
    • Reputational risks for international financial centers
    • Loss of correspondent banking relationships

Combating the Threats

To combat these threats, the International Monetary Fund (IMF) has been working closely with its member countries to develop and implement robust AML/CFT policies. The IMF’s strategy on AML/CFT is guided by its five-year policy review cycle, with the latest review taking place in 2023.

Macroeconomic Impact of Illicit Financial Flows

A recent paper published by the IMF highlights the macroeconomic impact of illicit financial flows (IFFs) on France-Polynesia’s economy. The study found that IFFs can have significant adverse effects on a country’s macroeconomy, including:

  • Reduced economic growth
  • Increased inequality
  • Decreased government revenue

Enhancing AML/CFT Efforts

To mitigate these risks, banks operating in France-Polynesia are being encouraged to implement robust AML/CFT measures. This includes:

  • Conducting regular customer due diligence
  • Monitoring transactions for suspicious activity
  • Reporting any suspicious transactions to the relevant authorities

The IMF is also providing technical assistance to France-Polynesia to help strengthen its AML/CFT regime, including training for financial sector regulators and supervisors, as well as support for the implementation of new regulations and laws.

Public Consultation

In addition, a public consultation was launched by the IMF to gather feedback from civil society organizations (CSOs) on how the Fund can further enhance its engagement on AML/CFT issues. The consultation received positive feedback from CSOs, who emphasized the need for:

  • Increased focus on illicit financial flows and their impacts
  • Greater attention to AML/CFT weaknesses in advanced economies

Conclusion

In conclusion, adopting best practices for AML/CFT is essential for maintaining financial integrity and stability in France-Polynesia. Banks operating in the region must take a proactive approach to combating money laundering and terrorist financing, while also working closely with regulators and supervisors to strengthen the overall AML/CFT regime.