Financial Crime World

Fiji’s Financial Underbelly: Criminal Organizations Exploit Island Nation’s Economic Diversification Efforts

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A new report by the Global Initiative Against Transnational Organized Crime has shed light on the alarming rise of criminal organizations in Fiji and other Pacific island nations. As these countries strive to diversify their economies, they are unwittingly attracting organized crime syndicates that exploit lax regulations and corruption.

Vulnerabilities in Pacific Island Nations

  • Limited monitoring and enforcement capabilities
  • Inadequate technical skills
  • Weak or absent due-diligence processes
  • Public service corruption

These vulnerabilities make it easy for criminal organizations to operate undetected, exploiting the economic diversification efforts of Pacific island nations.

Convergence between Business and Organized Crime

The report highlights the convergence between business and organized crime in industries such as:

  • Logging: Malaysian and Chinese companies dominate the market in Papua New Guinea and Solomon Islands.
  • Mining: Human trafficking has become a major issue in mining supply chains.
  • Fishing: Human trafficking is also prevalent in fishing supply chains.

Dire Consequences

The consequences of these activities are dire, including:

  • Human trafficking: Asian men being trafficked to the Pacific as laborers and women and children being trafficked domestically for sexual exploitation.
  • Illicit drug importation: The influx of foreigners has led to an increase in illegal drug imports.

Regulatory Environment Exploitation

The regulatory environment is also being exploited by those who seek to avoid sanctions. For example:

  • Russian ships banned from US and European ports have been given the Marshallese flag.
  • Individuals under sanction have used Pacific countries with lax company laws to hide their assets.

Golden Passports and Visas

These schemes, which allow foreigners to buy residency or citizenship through investment, generate revenue for some Pacific islands. However:

  • They lack proper due diligence mechanisms, making them vulnerable to corruption.

Fiji’s Experience

Fiji has been at the forefront of this issue, with a recent US-led investigation seizing two super yachts worth over $1 billion that were linked to a global web of shell companies and trusts registered in the Marshall Islands. The owner, Suleiman Kerimov, was under US sanctions and is reportedly linked to Russian President Vladimir Putin.

Overcoming the Challenge

Pacific island nations are caught between their desire to welcome investors and their fear of attracting criminal exploitation. To overcome this challenge:

  • They must increase their resilience by screening investors more effectively.
  • They must stop those who seek to abuse the system for illicit gain or employ exploitative practices.

Building Resilience

However, building resilience is a daunting task, particularly given the disparity in diplomatic power between Pacific nations and countries from which illicit foreign investment originates. The added risk of foreign business actors becoming tools for political influence only compounds the challenge.

Conclusion

As Fiji and other Pacific island nations seek to connect with the global economy, they must also protect themselves from criminal organizations that threaten their financial stability and integrity. To do this:

  • They need better integration into global efforts to counter transnational crime perpetrated by outright criminal groups and business actors alike.
  • They must increase their resilience by screening investors more effectively and stopping those who seek to abuse the system for illicit gain or employ exploitative practices.