Bhutan’s Financial System Falls Short on Anti-Money Laundering Efforts
International Community Raises Concerns Over Bhutan’s Financial System
A recent assessment by the international community has revealed that Bhutan’s financial system lacks sufficient measures to combat money laundering and terrorist financing. The country scored poorly in several areas, including its ability to assess risk, coordinate with other agencies, and implement effective financial sanctions.
Assessment of Risk and Coordination Efforts
According to the report, Bhutan is “partially compliant” with the Financial Action Task Force (FATF) recommendations on assessing risk and applying a risk-based approach. While the country has some systems in place, they are not fully effective. The report also highlighted concerns about Bhutan’s ability to coordinate with other agencies, including law enforcement and regulatory bodies.
Inadequate Laws and Regulations
Bhutan’s laws and regulations related to money laundering and terrorist financing were found to be incomplete or inadequate in several areas:
- No specific law criminalizing money laundering: The country lacks a comprehensive law that specifically criminalizes money laundering.
- Limited financial sanctions regime: Bhutan’s financial sanctions regime is limited, making it difficult to effectively sanction individuals and entities involved in illegal activities.
Record-Keeping Practices and Customer Due Diligence
The report also highlighted concerns about Bhutan’s record-keeping practices and customer due diligence requirements for financial institutions. While the country has implemented some measures to prevent the misuse of correspondent banking relationships, it still falls short in several areas.
Combatting Terrorist Financing
Bhutan was criticized for lacking a comprehensive approach to combating terrorist financing, including failing to implement targeted financial sanctions against individuals and entities involved in terrorist activities.
Recommendations for Improvement
The report concludes that while Bhutan has made some progress in implementing anti-money laundering measures, it still needs to:
- Strengthen its legal framework: Improve laws and regulations related to money laundering and terrorist financing.
- Improve coordination among agencies: Enhance collaboration between law enforcement, regulatory bodies, and other relevant agencies.
- Enhance monitoring and reporting requirements: Implement more effective monitoring and reporting requirements for financial institutions.
Overall, the report highlights the need for Bhutan to strengthen its anti-money laundering efforts to prevent financial crimes and protect the country’s financial system.