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Cook Islands’ Anti-Money Laundering and Counter-Terrorist Financing Efforts Under Scrutiny
A recent assessment has raised concerns about the Cook Islands’ efforts to combat money laundering (ML) and terrorist financing (TF). The report highlights several deficiencies in the country’s anti-money laundering and counter-terrorist financing measures.
Lack of Coordination and Investigation
According to the assessment, there is little evidence that the two operational-level coordination bodies, the Combined Law Agency Group (CLAG) and the Cook Islands National Intelligence Taskforce (CINIT), regularly discuss financial intelligence disseminations or ML/TF matters. Additionally, the country has not demonstrated effectiveness in investigating and prosecuting ML cases, with only one ongoing investigation into domestic laundering of foreign proceeds of crime.
Negligible Activity in Detection and Confiscation
The report also notes that there is negligible activity related to detection, restraint, and confiscation of criminal proceeds. Missed opportunities to confiscate proceeds are evident in the four ML/TF cases reviewed by the assessment team.
Risk Aversion and Supervision
Furthermore, the assessment finds that some reporting entities have a preference for avoiding risk rather than applying enhanced measures, which may lead to adverse consequences for financial inclusion.
In terms of supervision, the report notes that there is a sound licensing framework for financial institutions and licensed trust companies (LTCs), but limitations in market entry requirements for lawyers and no licensing or fit-and-proper requirements for lower-risk designated non-financial businesses and professions (DNFBPs).
Financial Intelligence Unit Recommendations
The Financial Intelligence Unit (FIU) has issued warning letters and required businesses to prepare action plans, but has not applied other forms of remedial sanctions. The report recommends that the FIU strengthen its supervisory activity under the AML/ CFT Act 2017.
Areas for Improvement
Overall, the assessment highlights several areas for improvement in the Cook Islands’ anti-money laundering and counter-terrorist financing efforts, including:
- Enhanced coordination between law enforcement agencies
- Improved investigation and prosecution of ML/TF cases
- Strengthened supervision of reporting entities
By addressing these deficiencies, the Cook Islands can improve its effectiveness in combating money laundering and terrorist financing.