Financial Crime World

Financial Crime Definition Takes Center Stage in Aruban Economy

Aruba’s anti-money laundering (AML) and combating the financing of terrorism (CFT) measures have been scrutinized, revealing significant weaknesses in the island nation’s financial system. A recent report highlighted the need for urgent reforms to prevent the misuse of exempt companies and offshore activities, as well as the lack of criminalization of terrorist financing.

Weaknesses in Aruba’s Financial System

  • The report assessed Aruba’s compliance with Financial Action Task Force (FATF) 40+9 Recommendations and found significant weaknesses.
  • Aruba’s geographical location and travel facilities make it vulnerable to money laundering, particularly in the real estate and jewelry sectors.
  • The country’s economic system is heavily reliant on tourism and oil refining, but efforts have been made to diversify its economy through offshore activities.

Recommendations for Reform

  • Criminalize terrorist financing as a separate and independent offense, rather than relying on ancillary provisions of the Criminal Code.
  • Implement United Nations Security Council Resolutions 1267 and 1373 without delay.
  • Review Aruba’s AML/CFT regime, including legislation, and dedicate more resources to agencies in charge of AML/CFT.
  • Clearly define tasks and priorities for each agency.

Gaps in Regulation and Supervision

  • Financial institutions that perform financial activities are not subject to AML/CFT requirements, creating potential opportunities for money launderers and other criminals to exploit.
  • The report recommended rectifying gaps in Aruba’s legislative framework and considering preparing new legislation that meets FATF standards.

Enhancements to International Cooperation

  • Review and update legislation to ensure effective collaboration between judicial and administrative bodies.
  • Strengthen supervision of financial institutions, with the Central Bank of Aruba taking a more prominent role in overseeing AML/CFT obligations.

Overall, the report highlights the need for urgent reforms to prevent the misuse of exempt companies and offshore activities, as well as the lack of criminalization of terrorist financing. By addressing these weaknesses and implementing recommended reforms, Aruba can strengthen its financial system and reduce the risk of financial crime.