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Dominica Fails to Meet International Standards on Customer Due Diligence in Banking

A recent evaluation by the Financial Action Task Force (FATF) has revealed that Dominica has failed to implement key measures to prevent money laundering and terrorist financing in its banking sector.

FATF Evaluation Reveals Compliance Issues

The evaluation, which assessed Dominica’s compliance with FATF recommendations on customer due diligence, found that the country was only “largely compliant” with one of the 40 recommendations. This recommendation pertains to assessing risk and applying a risk-based approach to customer due diligence.

Areas for Improvement

Dominica received low ratings in several areas, including:

  • National Cooperation and Coordination: The evaluation found that Dominica’s law enforcement agencies lacked effective cooperation and coordination.
  • Confiscation and Provisional Measures: The country failed to implement effective measures for money laundering offenses.
  • Regulation and Supervision of Financial Institutions: Dominica’s financial institution secrecy laws were deemed to be “compliant”, allowing for limited transparency in bank transactions.

Failure to Prevent Terrorist Financing

The FATF evaluation also found that Dominica had not implemented effective measures to prevent terrorist financing, including:

  • Targeted Financial Sanctions: The country failed to impose targeted financial sanctions related to terrorism and terrorist financing.
  • Record-Keeping Requirements: Dominica’s record-keeping requirements were deemed inadequate.

Consequences of Non-Compliance

Experts warn that the lack of effective anti-money laundering measures can lead to significant financial losses and undermine the integrity of the global financial system. If Dominica fails to implement necessary reforms, it could be added to the FATF’s blacklist, which would have severe consequences for its financial sector.

Deadline for Reforms

Dominica has been given a deadline to implement necessary reforms and improve its compliance with FATF recommendations. The country must take immediate action to address these issues to avoid being added to the blacklist.