FINANCIAL CRIME EPIDEMIC HITS MARSHALL ISLANDS, BANKS URGED TO BE VIGILANT
A critical advisory issued by the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has warned banks and financial institutions operating in the United States to be on high alert for suspicious transactions involving the Marshall Islands.
THE MARSHALL ISLANDS: A HUB FOR MONEY LAUNDERING
The tiny Pacific nation, with a population of just 65,000, has been identified as a hotbed of money laundering activity due to its lax regulations and strict bank secrecy laws. The FinCEN advisory highlights the significant opportunities that exist in the Marshall Islands for criminals to launder and protect the proceeds of crime.
SYSTEMIC PROBLEMS WITH THE MARSHALL ISLANDS’ COUNTER-MONEY LAUNDERING REGIME
FinCEN has identified several systemic problems with the Marshall Islands’ counter-money laundering regime, including:
- Lack of criminalization of money laundering: Money laundering is not a criminal offense in the Marshall Islands.
- No requirement for financial institutions to identify customers or maintain customer identification records or transaction records: Financial institutions are not required to identify customers or keep records of transactions.
- No requirement for financial institutions to report suspicious transactions: Financial institutions are not required to report suspicious transactions.
- Strict bank secrecy laws: The islands’ bank secrecy laws make it difficult for authorities to access information about transactions.
CONSEQUENCES OF THE MARSHALL ISLANDS’ WEAK COUNTER-MONEY LAUNDERING REGIME
As a result of these systemic problems, the Marshall Islands has been identified by the Financial Action Task Force on Money Laundering (FATF) as non-cooperative in the fight against money laundering.
WHAT CAN BE DONE TO IMPROVE THE MARSHALL ISLANDS’ COUNTER-MONEY LAUNDERING REGIME
Despite these challenges, the Marshall Islands is working to improve its counter-money laundering regime. The government is drafting new legislation that would criminalize money laundering and create a counter-money laundering authority and financial intelligence unit.
WHAT BANKS AND FINANCIAL INSTITUTIONS CAN DO TO HELP PREVENT MONEY LAUNDERING
Banks and financial institutions operating in the US are urged to be vigilant when dealing with transactions involving the Marshall Islands. A suspicious transaction reporting rule requires financial institutions to report transactions of $5,000 or more if they suspect that the transaction may involve money laundering activity.
WHAT BANKS AND FINANCIAL INSTITUTIONS CAN DO
- Be aware of the risks associated with transactions involving the Marshall Islands: Banks and financial institutions should be aware of the risks associated with transactions involving the Marshall Islands.
- Exercise enhanced scrutiny when dealing with transactions involving the Marshall Islands: Financial institutions should exercise enhanced scrutiny when dealing with transactions involving the Marshall Islands.
- Report suspicious transactions in accordance with applicable law: Financial institutions are required to report suspicious transactions in accordance with applicable law.
- Cooperate with authorities to investigate and prosecute money laundering activity: Banks and financial institutions should cooperate with authorities to investigate and prosecute money laundering activity.
CONTACT FINCEN
For more information about the FinCEN advisory or to report suspicious transactions, contact:
- Financial Crimes Enforcement Network (FinCEN)
- P.O. Box 39
- Vienna, VA 22183
- Phone: (703) 905-3773
- Fax: (703) 905-3885
- Email: questions@fincen.gov
- Website: <www.fincen.gov>
By working together, we can help prevent money laundering activity and protect our financial systems.