Dominica’s Efforts to Combat Money Laundering and Terrorist Financing: A Work in Progress
Introduction
A recent report highlights the progress made by Dominica in combating money laundering (ML) and terrorist financing (TF). While commendable efforts have been made, more work is needed to fully address these risks. This article will explore the country’s initiatives, challenges, and recommendations for improvement.
National Strategy and Policy Setting
International assessors praised Dominica’s commitment to national strategy and policy setting, citing the development of a National Policy (2019-2024) and National Strategy (2019-2024). These efforts have led to increased coordination and cooperation among authorities, as well as the purchase of detection equipment.
Key Achievements
- Development of a National Policy and National Strategy
- Increased coordination and cooperation among authorities
- Purchase of detection equipment
Dependence on Citizenship by Investment Program
Dominica’s economy is heavily reliant on its Citizenship by Investment (CBI) program, which accounts for 30% of GDP. While the assessors acknowledged that the CBI program has stringent systems and vetting processes in place, ML/TF and corruption risks associated with the program were not adequately assessed during the review.
Key Concerns
- Limited assessment of ML/TF and corruption risks
- Heavy reliance on a single economic sector (CBI)
Financial Sector Supervision
The Financial Services Union (FSU), as primary supervisory authority, has implemented training for regulated entities to raise awareness of TFS requirements. However, specific guidance on TFS obligations has not been provided to FIs or DNFBPs, leaving room for improvement.
Key Challenges
- Lack of guidance on TFS obligations
- Limited oversight and targeted approach for NPOs
Terrorist Financing Risks
Dominica’s legal framework for TF criminalization is strong, but the country’s understanding of its TF risks is limited due to an incomplete NRA analysis. The assessment did not consider several TF vulnerabilities, including:
• Cross-border wire transfers • Non-profit organizations (NPOs) • Legal persons • Virtual asset service providers (VASPs)
Key Concerns
- Limited understanding of TF risks
- Incomplete NRA analysis
Ongoing Challenges
The report highlights ongoing challenges in the implementation of TFS-TF without delay, as well as deficiencies in the freeze mechanism. The FSU has not provided guidance on TFS to FIs or DNFBPs on their obligations, and substantial work remains for the supervisor of NPOs to implement a targeted approach, outreach, or oversight of that sector.
Key Challenges
- Implementation of TFS-TF without delay
- Deficiencies in the freeze mechanism
- Limited guidance on TFS obligations
Conclusion
While Dominica’s efforts to combat ML and TF are commendable, more work is needed to fully address these risks. The country must prioritize:
• Completing its NRA analysis • Implementing a comprehensive sector review of NPOs • Providing guidance on TFS obligations to FIs and DNFBPs
By addressing these challenges, Dominica can strengthen its financial sector and protect against the threats of ML and TF.