Money Laundering Threats in the Maldives: FATF Reveals Concerns

Subtitle

The Atlantic Policy Advisory Council (APAC) sheds light on the Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) challenges in the Maldives

The Maldives, an archipelago nation in the Indian Ocean, is under scrutiny by the Financial Action Task Force (FATF) for potential money laundering (ML) and terrorist financing (TF) risks. According to the latest Mutual Evaluation Report by the Asia/Pacific Group on Money Laundering (APG), several critical deficiencies in the Maldives’ AML/CTF system require enhanced attention.

Background

• The Maldives is vulnerable to ML/TF due to its geographic location, dynamic financial sector, and expanding tourism industry.
• With a growing economy and a focus on financial inclusion, the Maldives must address ML/TF risks while fostering economic development.

Key Findings from FATF Report

1. Politically Exposed Persons (PEPs)

   • Inadequate measures were detected to identify, assess, and mitigate ML/TF risks associated with PEPs.

2. Beneficial Ownership

   • Proper identification and verification of beneficial owners of legal entities is insufficient.

3. Risk-Based Approach

   • The country needs to upgrade its risk-based approach to AML/CTF, focusing on high-risk sectors like real estate and money service businesses.

4. International Cooperation

   • The Maldives’ regulatory framework lacks sufficient mechanisms to facilitate international cooperation.

Recommendations

• With the global community placing increased emphasis on addressing ML/TF challenges, the Maldives has been urged to take decisive action to remedy the deficiencies identified.
• FATF representatives will meet this month to review progress made by high-risk and monitored jurisdictions, including the Maldives.
• The FATF will publish several consultative documents in the coming weeks to gather public feedback on proposed improvements to its methods and practices.