Financial Crime World

Samoan Financial System Lacking in Anti-Money Laundering Measures

A recent report has highlighted several areas where Samoa’s financial system is vulnerable to money laundering and terrorist financing. The report assessed the country’s compliance with anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations, revealing several shortcomings.

Private Sector Engagement

The report found that the private sector was not adequately engaged in the assessment process, providing general feedback but no specific feedback on the findings. This lack of transparency and engagement with financial institutions and designated non-financial businesses and professions (DNFBPs) raises concerns about the effectiveness of Samoa’s AML/CFT measures.

Risk-Based Approach

The report also highlighted that Samoa does not have a comprehensive risk-based approach to allocating resources and implementing measures to prevent or mitigate money laundering and terrorist financing. This deficiency was further exacerbated by trustee companies providing offshore financial services in Samoa being exempted from certain obligations under the Money Laundering Prevention Act 2007, despite being considered high-risk.

Legislative Shortcomings

The assessment identified several areas where Samoa’s legislation needs to be strengthened:

  • Lack of a legal framework for targeted financial sanctions related to terrorism and weapons proliferation financing
  • Technical deficiencies in laws such as the International Companies Act 1988, Trusts Act 2014, Companies Act 2001, MLP Act 2007, and MLP Regulations 2009

Action Items

To address these weaknesses, Samoa has been tasked with implementing a comprehensive risk-based approach to allocating resources and implementing measures to prevent or mitigate money laundering and terrorist financing. Specifically:

  • Provide feedback on findings from the assessment to financial institutions and DNFBPs
  • Implement a comprehensive risk-based approach to allocating resources and implementing measures to prevent or mitigate money laundering and terrorist financing
  • Ensure that trustee companies providing offshore financial services in Samoa are only exempted from obligations under the MLP Act 2007 if they have been identified as low-risk
  • Strengthen legislation to support targeted financial sanctions related to terrorism and weapons proliferation financing

Conclusion

The report’s findings and recommendations serve as a wake-up call for Samoa’s authorities to strengthen its AML/CFT system and ensure that it is effective in preventing or mitigating money laundering and terrorist financing. Effective implementation of these action items is crucial to addressing the weaknesses identified in the report.