COOK ISLANDS OFFSHORE FINANCIAL SECTOR RAISED RED FLAG FOR MONEY LAUNDERING

FinCEN Issues Advisory Warning for Suspicious Transactions from the Cook Islands

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 be on high alert for suspicious transactions originating from or routed through the Cook Islands.

Challenges with the Cook Islands Offshore Financial Sector

The small island nation in the South Pacific Ocean has been developing an offshore financial services sector, with:

• 30 licensed banks
• Over 6,000 International Business Companies (IBCs)
• Around 2,000 international trusts

However, FinCEN notes that the country’s counter-money laundering regime is plagued by systemic problems.

Key Weaknesses in the Cook Islands’ Counter-Money Laundering Regime

These deficiencies have led to the Financial Action Task Force on Money Laundering (FATF) identifying the Cook Islands as non-cooperative in the fight against money laundering.

Legislative Changes and Enhanced Scrutiny

The Cook Islands is considering legislative changes and establishing a domestic financial intelligence unit. FinCEN advises US financial institutions to give enhanced scrutiny to any transactions involving entities or persons with ties to the Cook Islands. This includes reporting suspicious transactions of $5,000 or more under the Bank Secrecy Act.

Raising Awareness and Preventing Money Laundering Activities

The advisory aims to raise awareness about the potential risks associated with the Cook Islands offshore sector and encourage US financial institutions to take a proactive approach in identifying and preventing money laundering activities.