Financial Crime World

Bhutan’s Struggle with Money Laundering Detection Methods

Challenges in Detecting and Preventing Money Laundering

A recent report by the Financial Action Task Force (FATF) has highlighted Bhutan’s ongoing challenges in detecting and preventing money laundering. The country has made some progress in implementing the FATF Recommendations, but still faces significant gaps in its anti-money laundering (AML) regime.

Areas of Concern

  • National Cooperation and Coordination: Bhutan’s ability to share information and coordinate efforts across different government agencies is limited.
    • Graded as “LC” (Largely Compliant)
  • Misuse of Financial Institutions Secrecy Laws: The country still needs to strengthen its regulations and supervision of financial institutions.
    • Graded as “C” (Compliant)

Progress Made

  • Targeted Financial Sanctions: Bhutan has made significant progress in implementing targeted financial sanctions related to terrorism and terrorist financing.
    • Graded as “PC” (Partially Compliant)
  • Transparency and Beneficial Ownership: The country demonstrates a good understanding of the importance of transparency and beneficial ownership of legal persons and arrangements.
    • Graded as “PC” (Partially Compliant)

Areas for Improvement

  • Statistics Collection on Suspicious Transactions: Bhutan needs to improve its capacity to collect and analyze data on suspicious transactions.
    • Graded as “NC” (Non-Compliant)
  • Guidance and Feedback to Financial Institutions: The country should provide regular updates to industry stakeholders.
    • Graded as “NC” (Non-Compliant)

Recommendations

  1. Strengthen National Cooperation and Coordination: Improve information sharing and coordination among government agencies.
  2. Improve Regulations and Supervision of Financial Institutions: Enhance customer due diligence and record keeping requirements.
  3. Increase Transparency and Beneficial Ownership: Strengthen regulations and supervision of legal persons and arrangements.
  4. Improve Statistics Collection on Suspicious Transactions: Develop capacity to collect and analyze data.
  5. Provide Regular Guidance and Feedback: Update industry stakeholders regularly.

By addressing these areas, Bhutan can improve its AML/CFT regime and reduce the risks associated with money laundering.