Financial Crime World

Aruba’s Regulatory Bodies Failing to Stem Financial Crime Tide

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A recent report has highlighted significant weaknesses in Aruba’s regulatory bodies, which are failing to effectively combat financial crime on the island. Despite being a major hub for offshore activities, including banking and company formation, Aruba’s anti-money laundering (AML) and combating the financing of terrorism (CFT) measures are incomplete, lacking coherence, and ineffective.

Key Findings

  • The level of criminality in Aruba is not high, but has increased significantly over the past decade.
  • Money laundering is primarily linked to drug trafficking and risks identified in real estate, jewelry, and exempt companies.
  • Aruba’s economic system is heavily reliant on tourism and oil refining, but the island has actively sought to diversify its economy through offshore activities.

Weaknesses in Aruba’s AML/CFT System

  • The report criticized Aruba for not criminalizing terrorist financing as required by international standards.
  • Urgent action is needed to implement United Nations Security Council Resolution (UNSCR) 1267 and 1373.
  • Aruba’s system of AML/CFT preventive measures is incomplete, lacking coherence, and ineffective.

Recommendations

  • The island should urgently review its regime, including legislation, and dedicate more resources to agencies responsible for AML/CFT.
  • Clearly defined tasks and priorities are needed for each agency.
  • Many financial activities in Aruba are not regulated or supervised, creating potential opportunities for abuse by money launderers and other criminals.

Supervision of Financial Institutions

  • The supervision of most financial institutions is currently handled by both the MOT (Aruban FIU) and Central Bank of Aruba, creating overlap and inefficient use of resources.
  • The report recommends reorganizing and strengthening supervision, including introducing a robust enforcement culture and ensuring the Central Bank supervises all types of financial institutions for AML/CFT obligations.

International Cooperation

  • The report identifies a need to enhance international cooperation at both judicial and administrative levels.
  • Consideration should be given to reviewing and updating legislation to strengthen Aruba’s regulatory bodies.

Conclusion

Overall, Aruba’s regulatory bodies require significant strengthening to effectively combat financial crime on the island. The report urges the island to take urgent action to address these weaknesses and ensure that its AML/CFT system is effective in preventing and detecting financial crimes.