Financial Crime World

Assessment of Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Regulations in Dominica

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Introduction

The Government of Dominica has implemented various regulations to prevent money laundering (ML) and terrorist financing (TF). However, a recent assessment by an international organization reveals areas where improvement is needed to strengthen its AML/CFT framework.

Key Findings

Risk Profile

  • Dominica’s National Risk Assessment (NRA) does not fully reflect the country’s risk profile for ML/TF.
  • The NRA should be enhanced to include a more comprehensive assessment of the risks associated with money laundering and terrorist financing.

Investigations and Prosecutions

  • While there have been instances of ML investigations and prosecutions, they do not match Dominica’s risk profile.
  • More efforts are needed to increase the number of ML investigations, prosecutions, and convictions.

Confiscation of Proceeds

  • The confiscation of criminal proceeds is a policy objective, but the declaration system for cross-border movements of cash or bank notes is not being effectively enforced.
  • Improvements should be made to ensure that the declaration system is functioning properly.

Areas of Concern

Terrorist Financing (TF) Risks

  • Dominica has a strong legal framework for TF, but its NRA did not consider several TF vulnerabilities, including:
    • Cross-border wire transfers
    • Non-profit organizations (NPOs)
    • Virtual asset service providers (VASPs)

Prosecutions and Convictions

  • There were no prosecutions or convictions related to TF in the period under review.

CFT Policy

  • Dominica lacks a national CFT policy that would continuously assess the TF threat and identify requirements for training and professional development of competent authorities.

TFS-TF Implementation

  • While Dominica has updated its legal framework required by UN Security Council Resolution 1267 and 1373, the Central Authority procedures are deficient.
  • Improvements should be made to ensure that the procedures are functioning properly.

Training and Awareness

  • Supervisors have provided outreach to the industry in relation to TFS, TF, and proliferation financing (PF), but specific training on TF risks and vulnerabilities has not been provided.

Recommendations for Improvement

  1. Enhance the NRA: Develop a more comprehensive risk assessment that reflects Dominica’s actual risk profile.
  2. Increase ML investigations and prosecutions: Improve the effectiveness of ML investigations and increase the number of prosecutions and convictions.
  3. Improve confiscation measures: Ensure that the declaration system for cross-border movements of cash or bank notes is functioning properly.
  4. Develop a national CFT policy: Establish a policy that continuously assesses the TF threat and identifies requirements for training and professional development.
  5. Provide training on TF risks and vulnerabilities: Provide specific training to competent authorities and regulated entities on TF risks and vulnerabilities.
  6. Implement freezing mechanisms: Develop and implement procedures for freezing designated persons and assets.

Conclusion

The assessment highlights areas where Dominica needs to improve its AML/CFT implementation to strengthen its regulatory framework and combat ML/TF threats. By implementing the recommended improvements, Dominica can enhance its ability to prevent and detect money laundering and terrorist financing activities.