Aruba Takes Steps to Combat Financial Terrorism, But More Effort Needed
A recent report highlights the island’s efforts to combat financial terrorism, but emphasizes that more needs to be done to strengthen its anti-money laundering (AML) and combating the financing of terrorism (CFT) measures.
Progress Made, but Weaknesses Remain
According to the report, Aruba has made some progress in implementing AML/CFT measures, including enhancing its ML offence and taking effective prosecution action against money launderers. However, there are still significant weaknesses in the system, particularly with regard to the regulation of trust and company service providers (TCSPs).
Economic Risks and Diversification
Aruba’s economic system is based largely on tourism and oil refining, but it has actively sought to diversify its economy through offshore activities. However, this development poses risks for money laundering and terrorist financing, particularly in the real estate and jewelry sectors.
Key Findings and Recommendations
One of the key findings of the report is that Aruba’s corporate vehicles represent a substantial risk for misuse by launderers and other criminals. The report urges Aruba to take rapid and significant progress to address this issue, including strengthening its AML/CFT requirements for TCSPs.
The report also notes that Aruba has not criminalized terrorist financing as required by the UN Security Council resolutions 1267 and 1373. Instead, it relies on existing provisions of the Criminal Code to deal with terrorist financing. The assessment team rejects this approach, urging Aruba to urgently criminalize TF as a separate and independent offence.
Areas for Improvement
The report identifies several areas where Aruba needs to improve its AML/CFT measures:
- Strengthening the regulation and supervision of TCSPs
- Improving the transparency and integrity of offshore companies and vehicles
- Enhancing international cooperation on AML/CFT matters
- Introducing a more robust enforcement culture for AML/CFT supervision
Conclusion and Response
The report concludes that Aruba’s system of AML/CFT preventive measures is incomplete and lacks coherence and effectiveness. It urges the island to take urgent action to address these weaknesses and ensure that its financial sector is not used to finance terrorist activities.
In response, Aruban authorities have announced plans to introduce new legislation and regulations to strengthen its AML/CFT regime. The government has also committed to increasing resources for AML/CFT agencies and improving international cooperation on these matters.