FINANCIAL INSTITUTIONS WARNED OF RISK IN MARSHALL ISLANDS TRANSACTIONS
The US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has issued a warning to financial institutions operating in the United States to be cautious when dealing with transactions involving the Marshall Islands.
Systemic Problems in the Marshall Islands’ Counter-Money Laundering Regime
According to FinCEN, the Marshall Islands’ counter-money laundering regime suffers from serious systemic problems. These include:
- Lack of criminalization of money laundering
- Inadequate customer identification and reporting requirements
- Bank secrecy laws that pose a significant risk, making it difficult for financial institutions to access information about customers and transactions
Key Weaknesses in the Marshall Islands’ Systems
FinCEN has identified several key weaknesses in the Marshall Islands’ systems. These include:
- Lack of regulation and supervision of offshore entities
- Failure to disclose beneficial ownership information
- Inadequate customer identification and verification requirements
- Absence of suspicious transaction reporting requirements
Enhanced Scrutiny Required
As a result, FinCEN advises financial institutions to give enhanced scrutiny to all transactions originating in or routed through the Marshall Islands, or involving entities organized or domiciled, or persons maintaining accounts, in the Marshall Islands.
Financial institutions subject to suspicious transaction reporting rules should carefully examine available facts relating to any such transaction to determine if it requires reporting in accordance with those rules. Institutions not yet subject to specific suspicious transaction reporting rules may consider these transactions in relation to their reporting obligations under other applicable law.
No Curtailment of Legitimate Business
The issuance of this advisory does not mean that US financial institutions should curtail legitimate business with the Marshall Islands, and the Treasury Department will consider any report relating to a transaction described in this Advisory to constitute a report of a suspicious transaction relevant to a possible violation of law or regulation.