Financial Crime World

Samoa Attracts Criminal Networks with its Financial Secrecy

A recent investigation has revealed that Samoa, a small Pacific island nation, is increasingly becoming a hub for international organized crime groups (IOCGs). The country’s stable economy, low levels of violent crime, and advanced banking system make it an attractive destination for criminal networks.

Attractive Destination for Criminal Networks

IOCGs are drawn to Samoa’s reputation as a secrecy haven, where they can move goods and money without detection. The country’s laws and regulations do not provide sufficient oversight, allowing criminals to operate with impunity.

Importance of Effective Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) System

According to experts, an effective AML/CTF system is crucial in reducing the attractiveness of Samoa for IOCGs. AML/CTF measures prevent the movement of funds used to pay bribes, purchase drugs or other contraband, and repatriate profits.

Action Items

Samoan Authorities’ Response

  • Conduct a comprehensive review of the country’s AML/CTF system to reduce its attractiveness to IOCGs.
  • Assess risks associated with predicate offenses, such as money laundering and terrorism financing, and implement measures to prevent or mitigate these threats.

Assessing Risks and Applying a Risk-Based Approach

The Monetary Exchange Regulation (MER) notes several deficiencies in Samoa’s AML/CTF system. The country has not implemented a comprehensive, risk-based approach to allocating resources and implementing measures to prevent or mitigate money laundering and terrorism financing.

  • Fill intelligence gaps and ensure that the next National Risk Assessment (NRA) considers in-depth the types and volume of threats associated with predicate offenses.
  • Provide feedback on findings from the NRA to financial institutions and designated non-financial businesses and professions.

The MER also identifies areas for improvement in Samoa’s legislation, including the lack of a legal framework for targeted financial sanctions related to terrorism and weapons proliferation financing. The country is urged to amend several laws, including:

  • International Companies Act 1988
  • Trusts Act 2014
  • Companies Act 2001
  • MLP Act 2007
  • MLP Regulations 2009

Legislative Reforms Needed

  • Document legislative improvements required and pursue a process of legislative reform.

Conclusion

The Samoan government is under pressure to address these concerns and strengthen its AML/CTF system to prevent the country from being used as a transit point for international organized crime groups.