Financial Crime World

APG Endorses Strengthened AML/CFT Framework in Palau

Bali, Indonesia - July 11, 2008

The Asia/Pacific Group on Money Laundering (APG) has endorsed the strengthened Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) legislative framework in Palau, following a comprehensive assessment mission conducted from June 16 to 27, 2008.

Assessment Highlights

During the assessment mission, APG assessors commended the Palauan authorities for their excellent assistance, cooperation, and hospitality. The team evaluated Palau’s AML/CFT systems against the APG’s Recommendations and international standards.

Areas Requiring Attention

While Palau has made significant progress in strengthening its AML/CFT framework, the assessment identified several areas that require attention and improvement:

  • Ensuring sufficient implementation of the amended Money Laundering and Proceeds of Crime Act of 2001 (MLPCA) and Financial Institutions Act of 2001 (FIA)
  • Addressing deficiencies in the criminalization of money laundering and financing of terrorism, particularly with respect to predicate offenses
  • Enhancing customer due diligence, record-keeping, transaction monitoring, and supervisory systems
  • Providing additional resources to the Financial Intelligence Unit (FIU) to enable effective functioning
  • Improving confiscation provisions, including the freezing of terrorist assets under UN Security Council Resolutions 1267 and 1373
  • Enhancing the effectiveness of the FIU through dedicated staffing resources, standard operating procedures, and improved communication with reporting entities

Country Profile

Palau has a relatively low crime rate and no known organized crime or terrorist financing activities. However, the country’s geographic location and economic dependence on tourism, agriculture, and fishing make it vulnerable to money laundering and terrorist financing risks.

Recommendations

To address these vulnerabilities, the APG recommends that Palau:

  • Expedite implementation of the amended MLPCA and FIA
  • Strengthen its criminalization of money laundering and financing of terrorism
  • Enhance customer due diligence, record-keeping, transaction monitoring, and supervisory systems
  • Provide additional resources to the FIU
  • Improve confiscation provisions, including the freezing of terrorist assets under UN Security Council Resolutions 1267 and 1373

Future Collaboration

The APG will continue to work closely with Palau to ensure the effective implementation of its AML/CFT framework and to address any outstanding issues.