Cook Islands’ Bank Secrecy Laws Under Fire: Financial Institutions Warned of Money Laundering Risks
US Treasury Issues Advisory on Cook Islands Anti-Money Laundering Regime
The United States Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has issued an advisory warning financial institutions operating in the US to exercise enhanced scrutiny on transactions involving the Cook Islands. The advisory highlights serious systemic problems with the country’s anti-money laundering regime, citing deficiencies that make it vulnerable to money laundering.
Deficiencies in Cook Islands’ Anti-Money Laundering Regime
- Lack of criminal penalties for money laundering
- Failure to verify customer identities
- Lack of requirements to retain transaction records or report suspicious transactions
- Anonymous accounts allowed by banks
- Ownership records can be kept in nominee form
These deficiencies have led the Financial Action Task Force on Money Laundering (FATF) to identify the Cook Islands as non-cooperative in the fight against money laundering.
FATF’s Warning and FinCEN’s Advisory
FinCEN’s advisory urges US financial institutions to carefully examine transactions involving the Cook Islands, taking into account factors such as:
- The country’s lack of anti-money laundering regulations
- Its commitment to bank secrecy
- The absence of legislative changes and a domestic financial intelligence unit
Technical Assistance Offered by US Treasury
The Treasury Department has emphasized that the issuance of this advisory does not mean that US financial institutions should curtail legitimate business with the Cook Islands. Instead, officials are standing ready to provide technical assistance to Cook Islands authorities as they work to address these deficiencies and improve their anti-money laundering regime.
Conclusion
US financial institutions are advised to report suspicious transactions related to the Cook Islands under relevant laws and regulations. The advisory serves as a warning to financial institutions to exercise enhanced scrutiny on transactions involving the Cook Islands until the country’s anti-money laundering regime is strengthened.