Dominica’s Financial Sector Needs Enhanced ML/TF Risk Assessment
A recent report by international assessors highlights areas of concern regarding money laundering (ML) and terrorist financing (TF) risks in Dominica. While the country has made significant strides in developing its national strategy and policy framework, more work is needed to comprehensively assess and mitigate these risks.
Dependence on CBI Programme
Dominica’s Citizenship by Investment Programme (CBI) contributes significantly to the country’s GDP, with 30% of GDP generated from this sector. However, ML/TF risks associated with the CBI programme were not fully assessed during the report’s review period.
Enhancing National Policy and Strategy Framework
To address identified vulnerabilities and risks, a realignment of Dominica’s national policy and strategy framework is necessary to ensure that threats, sectoral vulnerabilities, and ML/TF risks are captured in the National Intelligence Assessment Plan (NIAP).
Financial Intelligence Unit Lacks Training
The Financial Services Unit (FSU), as primary supervisory authority, has implemented training for regulated entities on TFS requirements. However, specific guidance has not been provided to financial institutions (FIs) or designated non-financial businesses and professions (DNFBPs) on their obligations.
NPOs and VASPs Need Targeted Approach
The report highlights the need for a comprehensive sector review of Non-Profit Organizations (NPOs) and Virtual Asset Service Providers (VASPs) to inform Dominica’s assessment of TF risk. Substantial work remains for the FSU, supervisor of NPOs, to implement a targeted approach, outreach, or oversight of this sector.
Freezing Mechanisms Not Implemented
Despite having mechanisms and instruments to apply freezing measures as described under the SFTA, Dominica has not found any assets of designated persons and has not implemented the asset freezing mechanisms in practice.
Conclusion
The report’s findings underscore the need for enhanced ML/TF risk assessment, training, and guidance to ensure the effective implementation of anti-money laundering and combating the financing of terrorism (AML/CFT) measures. Dominica must continue to strengthen its financial sector and address identified vulnerabilities to maintain a robust and secure financial system.
Recommendations
- Enhance national policy and strategy framework to capture ML/TF risks
- Provide specific guidance to FIs and DNFBPs on TFS requirements
- Conduct comprehensive sector review of NPOs and VASPs
- Implement targeted approach, outreach, or oversight of NPOs and VASPs
- Apply freezing measures as described under the SFTA