Vanuatu’s Legislative Framework Fails to Meet International Standards on Combating Terrorism Financing

Port Vila, Vanuatu - A recent assessment has revealed that Vanuatu’s legislative framework to combat terrorism financing (TF) is lacking in several key areas. The country’s laws and regulations fail to meet international standards set by the Financial Action Task Force (FATF), putting its financial system at risk of being exploited for illicit activities.

Risks and General Situation

Vanuatu’s money laundering threats primarily arise from foreign predicate offenses, including:

• Foreign tax crimes
• Illicit cross-border currency
• Domestic bribery and corruption
• Fraud (particularly VAT evasion)
• Drug offenses

The high-risk sectors identified by the draft National Risk Assessment (NRA) include:

• International banks and companies
• Remittance sector
• Trust and company service providers
• Currency exchange businesses
• Casinos
• Interactive gaming businesses

Overall Level of Compliance and Effectiveness

Vanuatu has increased its levels of technical compliance with FATF standards since the 2006 mutual evaluation in some areas, particularly for responsibility and powers. However, the country’s TF legislation remains inadequate, and its financial system continues to be at risk of being exploited for illicit activities.

Key Shortcomings

The assessment identified several key shortcomings in Vanuatu’s legislative framework:

• Lack of adequate mechanisms for addressing foreign predicate offenses
• Insufficient exchange of information with foreign authorities and cooperation in international investigations
• No overarching national TF strategy or dedicated risk-based policies and coordination mechanisms
• Limited allocation of financial and human resources to combat TF
• Limited technical expertise and capacity building in law enforcement and regulatory/supervisory authorities

Recommendations

The assessment recommends that Vanuatu takes immediate action to strengthen its legislative framework and increase cooperation with foreign authorities to combat TF. This includes:

• Developing an overarching national TF strategy
• Allocating adequate financial and human resources
• Supporting the development of technical expertise and capacity building in law enforcement and regulatory/supervisory authorities

The country’s failure to comply with international standards on combating TF puts its financial system at risk of being exploited for illicit activities. It is essential that Vanuatu takes immediate action to address these shortcomings and strengthen its legislative framework to combat TF effectively.