Kiribati: A Hub for Financial Crimes Amidst De-Risking by International Banks

A Country with Limited Banking Services and Remote Location

A recent report has highlighted the alarming rise of financial crimes in Kiribati, including tax evasion and cyber-enabled financial crimes such as internet scams and phishing. The country’s remote location and limited banking services have made it an attractive haven for criminal actors.

Organized Crime Networks and Corruption

The report suggests that while organized crime is not prevalent in Kiribati, small-scale criminal networks do exist, primarily involved in human trafficking and fauna crime, including illegal, unreported, and unregulated (IUU) fishing. These networks often operate on foreign vessels off the shores of Kiribati.

Corruption remains a significant issue in Kiribati, with petty corruption and nepotism widespread. However, there is no large-scale corruption except within the country’s fishing industry. The government has acknowledged these concerns and is making efforts to improve anti-corruption measures.

Legislative Framework and Law Enforcement

Kiribati’s legislative framework is sound, addressing organized crime through laws that meet international standards. However, the country lacks the capacity to combat overfishing, a significant issue in the country. The government works with other countries to identify drug trafficking, but lacks equipment and skills to accurately assess seizures.

The police force has established units to counter organized crime, resulting in positive changes in recent years. However, law enforcement is seen as inadequate to deal with major threats such as poaching of marine resources. The country relies on defence assistance from Australia and New Zealand under bilateral agreements.

Economic Environment and Financial Intelligence

Kiribati’s economic environment is characterized by limited resources to fight money laundering and terrorist financing effectively. Despite these limitations, the government has established a financial intelligence unit (FIU) and a system for reporting suspicious transactions.

The country remains highly dependent on foreign aid, making it vulnerable to state capture by economic predators. Economic development is constrained by a shortage of skilled workers, weak infrastructure, and remoteness from international markets.

Kiribati lacks victim and witness support structures in terms of civil society and social protection. However, the country participates in international crime prevention programs and receives support from New Zealand to develop a more preventive approach to policing.

The media sector is free of interference, although it is neither large nor diverse. Citizens have access to information, including from foreign radio services. Kiribati has signed an agreement to establish high-speed internet connection, potentially allowing for more diverse media content.

Conclusion

The report concludes that while Kiribati faces significant challenges in combating financial crimes, the government and civil society organizations are working together to address these issues. International support and cooperation will be crucial in helping the country build a stronger economy and reduce its vulnerability to financial crimes.