Financial Crime World

Palau’s AML/CFT Framework Needs Strengthening: APG Plenary Meeting Concludes Assessment Mission

Bali, Indonesia - July 11, 2008

The Asia-Pacific Group on Money Laundering (APG) has concluded its assessment mission in Palau, identifying significant deficiencies in the country’s Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) framework.

Assessment Findings

Key Areas of Concern

  • The lack of sufficient implementation of the amended Money Laundering and Proceeds of Crime Act of 2001 (MLPCA) and the Financial Institutions Act of 2001 (FIA), despite legislative measures being in place since 2001.
  • Deficiencies in the criminalization of money laundering, with only about half of the FATF-designated categories of predicate offenses covered by the money laundering offense.
  • Inadequate provisions for freezing terrorist assets under UN Security Council Resolutions (UNSCRs) 1267 and 1373, including the lack of procedures to ensure effective compliance with the resolutions.
  • Insufficient resources allocated to the Financial Intelligence Unit (FIU), which has been relocated from the Office of the Attorney General to the Financial Institutions Commission (FIC).
  • The FIU’s reliance on voluntary reporting and lack of dedicated full-time resources, hindering its effectiveness in processing suspicious transaction reports.

Recommendations

Priorities for Improvement

  • Implement AML/CFT legislation
  • Provide additional resources to the FIU
  • Establish procedures for freezing terrorist assets
  • Strengthen customer due diligence, record keeping, monitoring of transactions and relationships, and supervisory and oversight systems

Conclusion

Palau’s AML/CFT framework has been in place since 2001, but it is essential that the country takes concrete steps to address these deficiencies and improve its compliance with international standards. The APG will continue to monitor Palau’s progress and provide technical assistance as needed.

Contact Information

  • Name: [Name]
  • APG Secretariat
  • Phone: +[Phone number]
  • Email: [Email address]