Financial Crime World

APG Endorses Report on Palau’s Anti-Money Laundering and Combating Financing of Terrorism Efforts

Bali, Indonesia - July 7-11, 2008

The Asia-Pacific Group (APG) has endorsed a report highlighting the progress and challenges faced by Palau in its efforts to combat money laundering and financing of terrorism. The report was presented at the APG Plenary Meeting in Bali, Indonesia.

Progress and Challenges

  • The report commended Palauan authorities for their excellent assistance, cooperation, and hospitality during the assessment mission.
  • However, it also identified several areas that require improvement to strengthen Palau’s anti-money laundering (AML) and combating financing of terrorism (CFT) regime.

Legislative Framework

  • While Palau has recently strengthened its AML/CFT legislative framework, there is a need for expedited implementation of the legislation.
  • The country’s money laundering offense does not cover all predicate offenses, and the freezing of terrorist assets under United Nations Security Council Resolutions (UNSCRs) 1267 and 1373 is not adequately addressed.

Preventive Measures

  • Deficiencies in Palau’s preventive measures were identified, including:
    • Customer due diligence
    • Record keeping
    • Monitoring of transactions and relationships
    • Supervisory and oversight systems

Financial Intelligence Unit (FIU)

  • The FIU has been relocated to the Financial Institutions Commission (FIC), but lacks dedicated resources to carry out its additional tasks.
  • The report recommended that the FIU be provided with dedicated staffing resources and documented standard operating procedures on suspicious transaction reports (STRs) analysis and dissemination.

Commitment to Improvement

  • Palau was commended for its low crime rate and lack of organized crime or terrorist financing situations.
  • However, the report noted that prostitution and consumer marijuana sales are significant sources of criminal proceeds in Palau, and illegal fishing by unlicensed foreign vessels poses a problem.
  • The APG Plenary Meeting concluded that Palau’s efforts to combat money laundering and financing of terrorism require continued improvement and attention.

Conclusion

The Asia-Pacific Group emphasized its commitment to supporting Palau in this effort and encouraged the country to continue strengthening its AML/CFT regime to protect its financial system and reputation.