Financial Crime World

Vanuatu’s Fight Against Corruption and Money Laundering: A Mixed Bag

Introduction

PORT VILA, VANUATU - A recent report has highlighted both progress and challenges in Vanuatu’s efforts to combat corruption and money laundering. Experts have called for improvements in several key areas to ensure effective implementation of anti-money laundering (AML) and combating the financing of terrorism (CFT) measures.

The Role of the Vanuatu Financial Intelligence Unit

The Vanuatu Financial Intelligence Unit (VFIU), established within the State Law Office, plays a critical role in gathering financial intelligence and coordinating law enforcement agencies to prevent and detect money laundering. Reporting entities are required to file reports on suspicious transactions, large cash transactions, international currency transfers, and border currency declarations with the VFIU.

Challenges Ahead

Despite making progress in some areas, Vanuatu still faces challenges in implementing effective AML/CFT measures. The report highlights an absence of explicit obligations on reporting entities to make customer due diligence information available to the VFIU swiftly on request and a lack of clarity in applying politically exposed persons (PEPs) requirements.

The Proceeds of Crime Act (POCA) provides adequate legal tools to trace, seize, and confiscate the proceeds of serious offences. However, confiscation under the POCA depends on conviction for a serious offence. Experts recommend strengthening the framework around confiscation and expanding provisions beyond conviction-based confiscation to ensure law enforcement agencies have more avenues for freezing, seizing, and confiscating criminal proceeds.

Recommendations

To combat corruption and money laundering effectively, experts recommend that Vanuatu:

  • Review customer due diligence requirements to ensure alignment with international standards.
  • Strengthen the framework around confiscation of criminal proceeds.
  • Ensure the FIU is adequately staffed, resourced, and trained to analyze corruption-related financial information.
  • Improve information sharing between the FIU and anti-corruption agencies.
  • Build improved capacity for cross-border cooperation in anti-corruption and AML.

Conclusion

The report concludes that a commitment to ongoing collaboration among all stakeholders, including legislatures, supervisory bodies, law enforcement, and the private sector, is essential to tackling corruption and money laundering effectively. By implementing these recommendations, Vanuatu can strengthen its fight against corruption and money laundering and ensure a safer financial system for its citizens.