Financial Crime World

Samoan Paradise Attracts International Organised Crime Groups

Samoa’s unique combination of geographic location, stable economy, low levels of violent and petty crime, and advanced banking system has made it an attractive haven for international organised crime groups (IOCGs). A recent report highlights the alarming trend of IOCGs using Samoa as a transit point for their illegal activities.

The Attractiveness of Samoa

IOCGs rely on financial systems that allow them to move goods and money without detection. Samoa’s reputation as a secrecy haven with low capacity law enforcement has contributed to its allure. However, experts warn that this attractiveness can be reduced by implementing effective Anti-Money Laundering/Combating the Financing of Terrorism (AML/CTF) measures.

The Need for Effective AML/CTF Measures

The Samoan government acknowledges an intelligence gap in understanding the activities of IOCGs and is working to identify sources of intelligence to fill these gaps. Authorities will engage with international partners, including the Transnational Crime Unit, to better understand the nature and extent of IOCG operations in Samoa.

Assessing Risks and Applying a Risk-Based Approach

The report highlights several areas where Samoa’s AML/CTF system falls short. The country lacks a comprehensive risk-based approach to allocating resources and implementing measures to prevent or mitigate money laundering and terrorist financing. Additionally, there is no explicit obligation for financial institutions (FIs) to understand risks or document their risk assessments.

Action Items

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To address these deficiencies, the following action items have been identified:

  • Conduct a thorough review of the National Risk Assessment (NRA) to ensure it considers in-depth threats associated with predicate offences.
  • Provide feedback on findings from NRA to FIs and designated non-financial businesses and professions (DNFBPs).
  • Implement a comprehensive risk-based approach to allocating resources and implementing measures to prevent or mitigate ML/TF.

The report highlights technical deficiencies in Samoa’s legislation, including the lack of targeted financial sanctions (TFS) relating to terrorism and weapons proliferation financing. The country is also urged to amend several laws to address these issues.

Action Items

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To address these issues, the following action items have been identified:

  • Document legislative improvements required and pursue a process of legislative reform.
  • Amend key laws, such as:
    • International Companies Act 1988
    • Trusts Act 2014
    • Companies Act 2001
    • MLP Act 2007
    • MLP Regulations 2009

Conclusion

As Samoa continues to work towards strengthening its AML/CTF system, it is crucial that authorities prioritize these action items to reduce the attractiveness of the country to IOCGs and protect the financial system from illicit activities.