Dominican Republic Struggles with Banking Secrecy Laws and Regulations

The Dominican Republic has been facing criticism for its slow implementation of the Financial Action Task Force (FATF) Recommendations, a set of global standards aimed at preventing money laundering and terrorist financing. A recent report highlights the country’s shortcomings in several key areas.

Key Findings

• The Dominican Republic scored poorly on 25 out of 40 evaluation criteria.
• Many ratings fell short of compliance, with the country being found non-compliant (NC) or partially compliant (PC) in 15 categories.
  • National cooperation and coordination
  • Confiscation and provisional measures
  • Customer due diligence

Areas of Improvement

• Assessing risk and applying a risk-based approach: The Dominican Republic showed significant improvement, earning a “largely compliant” (LC) rating.

Concerns and Recommendations

• Lack of effective regulation and supervision of financial institutions:
  • Many institutions fail to meet international standards.
  • Recommendation: Increase cooperation and coordination between agencies, enhance customer due diligence, and improve record-keeping practices.
• Cash couriers and terrorist financing:
  • The Dominican Republic was found lacking in its efforts to combat these issues.
  • Recommendation: Improve transparency and beneficial ownership disclosure, as well as more effective regulation and supervision of financial institutions.

Implications

• The FATF Recommendations provide a framework for countries to combat money laundering and terrorist financing.
• The Dominican Republic’s slow progress raises concerns about its ability to effectively prevent illicit financial activities.