Financial Crime World

Financiers in Fiji: Battling Money Laundering and Unmasking Criminal Proceeds

Money laundering, a clandestine financial scheme to transform illicit funds into seemingly legitimate income, is a major concern for Fijian authorities and the international community. This article provides an in-depth look at money laundering in Fiji, the FIU’s role, and the measures being taken to combat this illegal activity.

The Global Impact of Money Laundering

According to the United Nations Office on Drugs and Crime, the global money laundering market is estimated to be between 2% and 5% of the world’s gross domestic product. In Fiji, around $100 million is laundered annually, posing a significant challenge to the country’s enforcement agencies and regulatory bodies.

Money laundering process diagram

History and Components of Money Laundering

The global fight against money laundering began in the 1980s in response to escalating concerns over drug trafficking. International treaties, such as the Vienna Convention in 1988 and the Palermo Convention in 2000, have paved the way for more stringent financial regulations and mechanisms to combat criminal activities.

Money laundering schemes usually involve three main components:

  1. Criminal Activity: The source of the proceeds from illegal activities.
  2. Proceeds of the Criminal Activity: The funds obtained from the initial crime.
  3. “Cleaning” of the Criminal Proceeds: The process of hiding, disguising, or legitimizing the tainted funds.

Money Laundering Typologies in Fiji

Money laundering schemes employ various methods, such as:

  • Shell Companies: Companies with no real business activities, used to conceal the origin of funds.
  • Family Members: Depositing and cleaning illegally obtained proceeds under the guise of family transactions.
  • Third Parties: Depositing and cleaning illegally obtained proceeds into third-party accounts.

In Fiji, these methods have been evident in various cases, including fraudulent VAT refund schemes. For example:

  • The Honeymoon Beach Resort, owned by Salendra Sen Sinha, was used to deposit and launder forged Fiji Revenue and Customs Authority cheques.
  • An associate of a convicted money launderer used bank accounts held under the names of his siblings for the deposit and cleaning of forged cheques.
  • Ms. Doreen Singh, an ANZ bank officer, encashed fraudulently issued Fiji Electricity Authority cheques into her personal account and those of associated parties.

Fiji’s regulatory framework includes:

  1. The Proceeds of Crime (POC) Act, which criminalizes money laundering and carries penalties of up to 20 years in prison for individuals and a $600,000 fine for companies.
  2. The Financial Transactions Reporting (FTR) Act, which obliges financial institutions to report transactions and maintain internal controls to protect against money laundering. Failure to comply with the reporting requirements can result in penalties. Additionally, the POC Act allows for civil forfeiture of illicit proceeds without the need for a criminal conviction.

Educating and Engaging the Accounting Sector

Accountants play a crucial role in financial crimes and are often targeted to assist in hiding the origin and ownership of illegal funds. Education and engagement with professionals in the accounting sector are essential for an effective anti-money laundering strategy.

Conclusion

Despite efforts to combat money laundering, it is an ongoing battle that requires collaboration between law enforcement agencies, financial institutions, and regulatory bodies. By working together, Fiji can protect its financial system, borders, and people from the destructive impact of money laundering.