Dominica Fails to Meet International Standards on Financial Crime Reporting
A recent report from the Financial Action Task Force (FATF) has revealed that Dominica has failed to meet several key requirements for preventing and detecting financial crimes. The island nation was assessed in a mutual evaluation, which is conducted by the FATF to evaluate countries’ compliance with international anti-money laundering and combating the financing of terrorism standards.
Issues Identified in the Report
According to the report, Dominica has not fully implemented measures to prevent money laundering and terrorist financing in several key areas. These include:
- Creation of a Dedicated Financial Intelligence Unit: The country lacks a dedicated financial intelligence unit that can effectively monitor and analyze suspicious transactions.
- Regulation and Supervision of Non-Profit Organizations: Dominica’s regulations do not require non-profit organizations to be registered or supervised, making it difficult to track their activities and ensure they are not being used for illicit purposes.
- Implementation of Customer Due Diligence Requirements: The country’s financial institutions are not required to obtain information about the beneficial owners of their customers’ accounts, making it challenging to identify and track suspicious transactions.
Correspondent Banking Relationships
The FATF report also noted that Dominica has not done enough to address the risks associated with correspondent banking relationships. These relationships allow banks to conduct international transactions on behalf of their customers, but they can be used for illicit activities if not properly regulated.
- Lack of Transparency and Beneficial Ownership Requirements: The country’s lack of transparency and beneficial ownership requirements for legal persons makes it difficult to identify and track suspicious transactions.
- Inadequate Guidance and Feedback: Dominica has not provided adequate guidance and feedback to its financial institutions, leading to inconsistent application of anti-money laundering and combating the financing of terrorism requirements.
Recommendations from the FATF
The FATF has called on Dominica to address these issues and implement the necessary reforms to meet international standards. The organization recommends that the country:
- Establish a Dedicated Financial Intelligence Unit: Create a dedicated financial intelligence unit with sufficient resources to effectively monitor and analyze suspicious transactions.
- Regulate and Supervise Non-Profit Organizations: Register and supervise non-profit organizations to ensure they are not being used for illicit purposes.
- Implement Customer Due Diligence Requirements: Require all financial institutions to obtain information about the beneficial owners of their customers’ accounts.
- Enhance Correspondent Banking Regulations: Strengthen correspondent banking regulations to address the risks associated with these relationships.
- Provide Adequate Guidance and Feedback: Provide adequate guidance and feedback to financial institutions to ensure consistent application of anti-money laundering and combating the financing of terrorism requirements.
- Improve Transparency and Beneficial Ownership Requirements: Implement transparency and beneficial ownership requirements for legal persons to facilitate identification and tracking of suspicious transactions.