Title: Vanuatu Faces Scrutiny Over Money Laundering and Terrorist Financing

Subtitle: Asia-Pacific Group on Money Laundering Issues Critical Statement

The Asia-Pacific Group on Money Laundering (APG) has publicly criticized Vanuatu for serious deficiencies in its measures to combat money laundering and the financing of terrorism. This renewed criticism was reflected in an updated public statement issued by the APG, which remains in place until Vanuatu addresses key deficiencies in its anti-money laundering and counter-terrorist financing (AML/CFT) system.

APG’s Concerns and Recommendations

According to the APG statement, Vanuatu’s third round mutual evaluation report, adopted in October 2014, formed the basis for the updated statement. Since then, Vanuatu has been referred to the Financial Action Task Force’s (FATF) International Cooperation Review Group. The FATF is an international organization monitoring the implementation of AML/CFT measures by its members.

The key areas where improvements are required, as highlighted in the statement, include:

1. Effective implementation and enforcement of AML/CFT legislation
2. Improved risk assessment and customer due diligence procedures

The updated statement comes amid growing international focus on financial crimes in the Pacific region, with several other jurisdictions also facing criticism, such as Palau and the Marshall Islands.

Government’s Response

The Vanuatu government has pledged to address the concerns raised by the APG and the FATF. Planned measures include:

• Setting up a Financial Intelligence Unit (FIU) to counter financial crimes
• Enhancing its supervisory capacity
• Signing up to several international initiatives aimed at combating money laundering and terrorist financing

Impact of the Criticism

As of now, Vanuatu remains on the FATF’s “grey list” of high-risk and other monitored jurisdictions, with potential impacts on its international credibility and its ability to attract foreign investment. The country will undergo increased scrutiny in the coming months as it works to strengthen its regulatory framework and regain FATF’s confidence.

Financial Institutions’ Role

Financial institutions operating in Vanuatu must remain vigilant and implement robust AML/CFT controls to protect themselves against potential money laundering and terrorist financing risks. They should also closely monitor developments related to Vanuatu’s efforts to strengthen its regulatory framework and regain FATF’s confidence.