Financial Crime World

APG Endorsed Article

Palau Enhances AML/CFT Framework, but Implementation Lags Behind

Bali, Indonesia - July 11, 2008

The Asia-Pacific Group on Money Laundering (APG) has endorsed the findings of its assessment mission to Palau, highlighting both progress and challenges in the country’s efforts to combat money laundering and terrorist financing.

Palau has recently strengthened its anti-money laundering and combating the financing of terrorism (AML/CFT) legislative framework with amendments to the Money Laundering and Proceeds of Crime Act of 2001 and the Financial Institutions Act of 2001, as well as the enactment of the Counter-Terrorism Act of 2007 and the Cash Courier Disclosure Act of 2007. However, implementation of these measures remains insufficient.

Key Findings

The assessment mission highlighted the following key findings:

  • The offense of money laundering is criminalized in Palau, but only about half of the twenty FATF-designated categories of predicate offenses are covered by the money laundering offense.
  • The financing of terrorism has been criminalized, but the freezing of terrorist assets under UN Security Council Resolutions 1267 and 1373 is not adequately addressed.
  • The Financial Intelligence Unit (FIU) has recently been relocated from the Office of the Attorney General to the Financial Institutions Commission, but lacks dedicated resources to effectively carry out its functions.

Recommendations

The APG recommends that Palau dedicate additional resources to implementing its AML/CFT framework, particularly in terms of:

  • Customer due diligence
  • Record keeping
  • Supervisory systems

Additionally, the FIU should:

  • Establish documented standard operating procedures for STR analysis and dissemination
  • Obtain additional information from reporting entities without the need for a court order

Law Enforcement Capabilities

Palau’s law enforcement agency, the Division of Criminal Investigation & Drug Enforcement (CID), has been tasked with investigating money laundering and terrorist financing cases. However, it has not initiated an investigation into these crimes that was not related to an STR. The APG urges Palau to strengthen its law enforcement capabilities in this area.

Conclusion

While Palau has made progress in enhancing its AML/CFT framework, further efforts are needed to ensure effective implementation and prevention of money laundering and terrorist financing.