Aruba’s Financial Underbelly: Types of Financial Crimes on the Rise

A recent report has shed light on the alarming rise of financial crimes in Aruba, a small island nation in the southern Caribbean. Despite its relatively low crime rate compared to other countries, Aruba has seen a significant increase in criminal activity over the past decade.

Money Laundering: A Major Concern

Money laundering is a major concern in Aruba, with drug trafficking being the primary driver. The island’s strategic location and travel infrastructure make it an attractive hub for illicit cash flows. Real estate, jewelry, and exempt companies are particularly vulnerable sectors, as well as the misuse of offshore banks and companies.

Economic System: A Recipe for Misuse

Aruba’s economic system is heavily reliant on tourism and oil refining, but efforts to diversify have led to a proliferation of offshore activities. The lack of transparency and integrity in these vehicles poses a significant risk for misuse by criminals.

Inadequate Anti-Terrorist Financing Laws

While Aruba has enhanced its money laundering laws, it has chosen not to criminalize terrorist financing, which the report argues is inadequate and leaves the country vulnerable to exploitation by terrorists. The assessment team urges urgent action to implement United Nations Security Council Resolution 1267 and 1373, which require countries to criminalize terrorist financing.

Incomplete AML/CFT Measures

The report concludes that Aruba’s anti-money laundering and combating the financing of terrorism (AML/CFT) measures are incomplete, lacking coherence and effectiveness. It recommends a thorough review of the regime, including legislation, and increased resources for agencies responsible for AML/CFT. The report also highlights the need for clearer task assignments and priorities to each agency.

Unregulated Financial Institutions

Furthermore, many financial institutions in Aruba operate without regulation or supervision, creating opportunities for money launderers and other criminals. The basic preventive legislation for AML/CFT is incomplete, with gaps relative to international standards. The report urges Aruba to rectify this by introducing new and coherent legislation that implements all Financial Action Task Force (FATF) requirements.

Inefficient Supervision

The supervision of financial institutions is also criticized for being inefficient, with both the MOT (Aruban FIU) and the Central Bank of Aruba responsible for AML/CFT oversight. The report recommends reorganizing supervision to reduce overlap and improve enforcement culture.

In summary, the report highlights the need for urgent action by the Aruban government to strengthen its financial regulations, improve transparency, and enhance cooperation with international partners to combat financial crimes.