Financial Crime World

Dominican Republic Falls Short on Combating Financial Crime

Introduction

The Dominican Republic has been found wanting in its efforts to combat financial crime, with the country failing to meet several key international standards. A recent assessment by global watchdogs has highlighted significant shortcomings in the country’s anti-money laundering (AML) and counter-terrorist financing (CFT) framework.

Technical Compliance Rating

According to a comprehensive report by the Financial Action Task Force (FATF), an intergovernmental organization that sets standards for combating money laundering and terrorist financing, the Dominican Republic has been rated as “partially compliant” or “non-compliant” in 27 out of 40 recommendations. This indicates significant weaknesses in the country’s AML/CFT framework.

Areas of Non-Compliance

Some of the key areas where the Dominican Republic failed to meet international standards include:

  • Confiscation and Provisional Measures: The country was found to be only partially compliant with FATF Recommendation 4, which requires that countries have laws in place to confiscate proceeds from crime.
  • Terrorist Financing Offense: The Dominican Republic was also rated as partially compliant with FATF Recommendation 5, which calls for countries to establish an offense of terrorist financing.
  • Non-Profit Organizations: The country’s rating on this recommendation was non-compliant, indicating that it has not implemented adequate measures to prevent the misuse of non-profit organizations.
  • Financial Institution Secrecy Laws: While the Dominican Republic scored well in this area, being rated as compliant with FATF Recommendation 9, its implementation and enforcement mechanisms were found to be weak.

Key Recommendations

The FATF report identified several areas where the Dominican Republic needs to improve, including:

  • Strengthening Laws and Regulations: The country must strengthen its laws and regulations to prevent money laundering and terrorist financing.
  • Enhancing Customer Due Diligence Requirements: Financial institutions must enhance their customer due diligence requirements to ensure that they are not facilitating illicit activities.
  • Improving Record-Keeping and Internal Controls: The country’s financial authorities must improve record-keeping and internal controls to prevent the misuse of financial systems.
  • Increasing Transparency in Beneficial Ownership: The government must increase transparency in beneficial ownership of legal persons and arrangements.

Government Response

In response to the report, the Dominican government has committed to taking swift action to address the identified weaknesses. The country’s financial authorities have pledged to implement reforms aimed at strengthening its AML/CFT framework and improving compliance with FATF recommendations. A working group has been established to oversee the implementation of these reforms and ensure that necessary legislative changes are made in a timely manner.

The government’s response is crucial, as failure to address these shortcomings may result in further scrutiny and potential sanctions from international partners. The Dominican Republic must take immediate action to address these weaknesses and demonstrate its commitment to combating financial crime.