Financial Crime World

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Financial Crimes Worrying Neighbors: Types of Financial Crimes in NIUE

A recent advisory from the US Department of the Treasury has raised concerns about financial crimes in Niue, a small island nation in the South Pacific Ocean. The country’s financial sector, which consists of one domestic bank, one offshore bank, and over 3,000 international business companies (IBCs), is plagued by systemic problems that make it vulnerable to money laundering and other financial crimes.

Challenges Facing Niue’s Financial Sector

  • Lack of resources in the counter-money laundering regime
  • Delegation of supervisory and regulatory responsibilities to foreign private sector interests
  • No ongoing supervision of licensed offshore banks
  • No requirement for financial institutions to report suspicious transactions

IBCs operating in Niue are also shrouded in secrecy, with laws that prohibit them from disclosing the names of their beneficial owners, directors, or managers unless compelled by the courts. Additionally, the Niuean Cabinet has the power to exempt institutions from any or all requirements of financial laws and regulations, a move that cannot be challenged through any other procedure.

Consequences of Inadequate Financial Regulation

  • Niue has been identified as non-cooperative in the fight against money laundering by the Financial Action Task Force on Money Laundering (FATF)
  • The country’s authorities have acknowledged the need to strengthen its counter-money laundering program
  • Experts warn that the current legal, supervisory, and regulatory systems create significant opportunities for criminals to launder money

Recommendations for US Banks and Institutions

  • Give enhanced scrutiny to all transactions involving Niue, including those originating from or routed through the country
  • Carefully examine any such transaction to determine if it requires reporting under relevant rules
  • Subject to the Bank Secrecy Act, institutions should carefully review transactions involving Niue to ensure compliance with relevant regulations

The US Treasury Department has issued an advisory to emphasize the need for enhanced scrutiny and has offered technical assistance to Niuean officials as they work to remedy their counter-money laundering systems.