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Cook Islands Fails to Meet International Anti-Money Laundering and Counter-Terrorist Financing Standards
A recent report by the Financial Intelligence Unit (FIU) has highlighted several deficiencies in the Cook Islands’ efforts to combat money laundering (ML) and terrorist financing (TF).
Deficiencies in Reporting Institutions
According to the report, not all reporting institutions (RIs) were able to electronically submit reports at the time of the on-site assessment, limiting the FIU’s ability to conduct real-time operational analysis. Additionally, there were problems with uploading batch files, resulting in some RIs reporting via email.
Investigation and Prosecution of ML Cases
The report also noted that the Cook Islands has not demonstrated effectiveness in investigating and prosecuting ML cases, with many cases remaining unsolved or unresolved.
Regulatory Framework and Implementation
Furthermore, the country’s regulatory framework for preventive measures is sound, but implementation by RIs has been limited, particularly among lower-risk institutions. The FIU highlighted challenges in identifying beneficial ownership, particularly where complex structures and foreign ownership are involved. Additionally, RIs face difficulties in identifying families and close associates of domestic politically exposed persons (PEPs), due to the country’s small size and interconnected relationships.
Supervision and Sanctions
In terms of supervision, the report noted that there is a sound licensing framework for financial institutions and licensed trust companies, including fit-and-proper requirements to prevent criminals from operating within these sectors. However, there are some limitations in the market entry requirements for lawyers and no licensing or fit-and-proper requirements for lower-risk designated non-financial businesses and professions (DNFBPs). The FIU has issued warning letters and required businesses to prepare action plans, but has not applied other forms of remedial sanctions.
Conclusion
Overall, the report concludes that while the Cook Islands has made some progress in implementing anti-money laundering and counter-terrorist financing measures, there is still much work to be done to meet international standards. The country must take immediate action to address these deficiencies and ensure that its financial system is not used for illicit activities.
Recommendations
The report makes several recommendations to the Cook Islands government, including:
- Improving the reporting requirements for RIs
- Enhancing the investigation and prosecution of ML cases
- Strengthening the regulatory framework for preventive measures
- Implementing more effective supervisory activities
- Improving transparency in legal persons and arrangements
Additional Recommendations
The report also recommends that the FIU increase its efforts to identify and prosecute money laundering and terrorist financing, and that the government provide additional resources to support these efforts.
Conclusion
The Cook Islands’ failure to meet international anti-money laundering and counter-terrorist financing standards is a cause for concern. The country must take immediate action to address these deficiencies and ensure that its financial system is not used for illicit activities. The report’s recommendations aim to support the government in its efforts to combat money laundering and terrorist financing, and to improve transparency and accountability in the financial sector.