Financial Crime World

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APG Endorses Report on Palau’s AML/CFT Efforts

Bali, Indonesia - July 2008

The Asia-Pacific Group on Money Laundering (APG) has endorsed a report highlighting the key findings of its assessment mission to Palau from July 7-11, 2008. The report commends the Palauan authorities for their excellent assistance, cooperation, and hospitality throughout the assessment mission. However, it also identifies several areas that require improvement in order to strengthen Palau’s anti-money laundering (AML) and combating the financing of terrorism (CFT) framework.

Key Findings

  • While Palau has recently strengthened its AML/CFT legislative framework, there is a need for expedited implementation of the new laws.
  • The offense of money laundering is criminalized in the Money Laundering and Proceeds of Crime Act of 2001 (MLPCA), but only about half of the twenty FATF designated categories of predicate offenses are covered by the money laundering offense.
  • The Palauan law shows several deficiencies with respect to the provisional measures of seizing of evidence and property, freezing of capital and financial transactions, and confiscation of proceeds of crime.
  • The Financial Intelligence Unit (FIU) has been relocated from the Office of the Attorney General to the Financial Institutions Commission, but it lacks dedicated full-time resources and documented standard operating procedures.
  • Palau’s legal systems and institutional measures require strengthening, particularly in relation to the freezing of terrorist assets under UNSCRs 1267 and 1373.

Recommendations

To address these issues, the APG recommends that Palau:

  • Expedite the implementation of its new AML/CFT laws.
  • Strengthen its legislative framework by covering all FATF designated categories of predicate offenses.
  • Improve its provisional measures, including seizing of evidence and property, freezing of capital and financial transactions, and confiscation of proceeds of crime.
  • Provide dedicated full-time resources and documented standard operating procedures for the FIU.
  • Enhance its legal systems and institutional measures to effectively freeze terrorist assets under UNSCRs 1267 and 1373.

Conclusion

The APG commends Palau’s efforts to strengthen its AML/CFT framework, but emphasizes the need for further improvement in order to meet international standards. The group hopes that this report will serve as a useful tool for Palau to address these issues and enhance its ability to combat money laundering and terrorist financing.