Solomon Islands Faces High Risk of Money Laundering and Terror Financing

Introduction

The Solomon Islands is facing a high risk of money laundering (ML) and terror financing (TF), according to a recent report. The country’s financial sector is vulnerable to criminal activities, including banks, finance companies, money transfer services, money changers, casinos, and dealers in precious metals and stones.

Factors Contributing to High Risk

Several underlying factors contribute to the high risk of ML/FT in the Solomon Islands:

• Inadequate Resourcing: Supervisory and law enforcement agencies lack the necessary resources to effectively combat ML/TF.
• Limited Recording and Maintenance of Statistics: The country lacks effective recording and maintenance of statistics, making it difficult to track and monitor ML/TF activities.
• Limited Supervisory Role of SIFIU: The Solomon Islands Financial Intelligence Unit (SIFIU) has a limited supervisory role, hindering its ability to effectively combat ML/TF.
• Non-Enactment of the Anti-Corruption Bill: The non-enactment of the Anti-Corruption Bill creates an environment conducive to corruption and ML/TF.
• Insufficient Coordination between Government Agencies: There is a lack of coordination between government agencies, making it difficult to effectively combat ML/TF.

Potential for Terrorism Financing

While there have been no identified cases of terrorism financing in the Solomon Islands, the country’s growth in social media and youth unemployment increase the likelihood of TF. The Counter Terrorism Act 2009 (CTA 2009) creates the offense of terrorist act and terrorist financing, but there is limited information or statistical data on terrorism-related activities or TF in the country.

Measures to Combat Terrorism Financing

The Solomon Islands government is taking measures to fulfill its international obligations to combat terrorism and extremism, including:

• Prosecuting Terrorists and Financiers: Prosecuting terrorists and financiers of terrorism under the CTA 2009.
• Seeking International Assistance Programs: Seeking international assistance programs to enhance law enforcement capacity.
• Providing Additional Training for Judges: Providing additional training for judges to hear cases involving terrorism and TF.

Conclusion

The report highlights the need for a comprehensive approach to address the ML/FT risks in the Solomon Islands, including addressing institutional weaknesses, improving supervision and regulation, and enhancing international cooperation. The country’s non-profit organizations (NPOs) are particularly vulnerable to abuse by terrorist organizations posing as legitimate entities, and the government should take measures to prevent such abuses. Stemming violent extremism and radicalization through social media use is also a priority for the Solomon Islands government.