Financial Crime World

Samoan Financial Sector Lags Behind in Combatting Money Laundering and Terrorist Financing

A recent report has highlighted several key areas where Samoa’s financial sector is falling short in its efforts to combat money laundering and terrorist financing.

Lack of Transparency and Feedback

  • Despite the private sector’s involvement in assessing risks, no feedback on findings has been provided to financial institutions or designated non-financial businesses and professions.
  • This lack of transparency means that there is no clear understanding of the risks associated with certain transactions or customers.

Insufficient Resource Allocation and Measures Implementation

  • Samoa’s approach to allocating resources and implementing measures to prevent money laundering and terrorist financing is not comprehensive or risk-based.
  • This could be leaving vulnerabilities in the system unaddressed.

Concerns with Trustee Companies

  • Trustee companies providing offshore financial services may be exempt from certain obligations under the Money Laundering and Prevention of Financing of Terrorism Act 2007, despite being considered high-risk.
  • This exemption was granted without a proven low risk assessment, which is concerning given the NRA’s suggestion that the offshore sector poses a significant threat.

Shortcomings in Legislation

  • There is no legal framework to support targeted financial sanctions related to terrorism and weapons proliferation financing.
  • Key laws such as the International Companies Act 1988 and Trusts Act 2014 require amendments to address technical deficiencies.

Concerns with Sanctions

  • Criminal sanctions under the Money Laundering and Prevention of Financing of Terrorism Act 2007 are not considered proportionate or dissuasive, which could undermine efforts to combat money laundering and terrorist financing.
  • The range of sanctions applicable to financial institutions and designated non-financial businesses and professions also raises concerns.

Action Items

  • Provide feedback on findings from NRA assessments to financial institutions and designated non-financial businesses and professions.
  • Implement a comprehensive risk-based approach to allocating resources and implementing measures to prevent money laundering and terrorist financing.
  • Strengthen the legal framework to support targeted financial sanctions and weapons proliferation financing.

Commitment to Legislative Change

  • The Samoa authorities have committed to commencing a process to document legislative improvements required and pursuing a process of legislative change.
  • It is essential that these changes are implemented swiftly to ensure the country’s financial sector is better equipped to combat money laundering and terrorist financing.