Financial Crime World

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Financial Crimes Rampant in Kiribati: “De-Risking” Threatens Country’s Economic Stability

A recent surge in financial crimes, including tax evasion and cyber-enabled scams, has raised concerns about the stability of Kiribati’s economy. The Pacific nation’s limited data on financial crimes has made it difficult to track the extent of the problem, but experts warn that the country is at risk of being left behind due to a lack of adequate measures to combat financial crime.

Criminal Actors

Kiribati has a relatively low presence of organized crime groups, but small-scale criminal networks do operate in the country. These networks are involved in:

  • Human trafficking
  • Fauna crime, particularly IUU fishing
  • Operating on foreign vessels off Kiribati’s shores

Foreign actors have been known to be involved in Kiribati’s criminal markets, particularly in:

  • The cocaine trade
  • Overfishing

However, there is limited information available about the extent of their involvement and the private sector’s contribution to transnational organized crime.

Leadership and Governance

Kiribati’s government has faced criticism for its inadequate oversight and corruption, particularly regarding resource access. The country relies heavily on foreign donors, which can create opportunities for improvement but also poses risks.

The government has introduced measures to combat corruption, including:

  • Anti-corruption laws
  • A financial intelligence unit (FIU)

However, the country still faces challenges in implementing these measures due to limited resources and capacity.

Criminal Justice and Security

Kiribati’s judicial system is plagued by:

  • Corruption
  • Conflicts of interest

A recent investigation into a High Court judge revealed not only corruption but also intervention from the executive in the judiciary.

The country’s detention system lacks adequate resources, leading to poor conditions and security issues within prisons. The police service focuses primarily on community crime prevention, with limited resources devoted to countering organized crime.

Economic and Financial Environment

Kiribati has limited resources to effectively combat money laundering and terrorist financing. The country is heavily dependent on foreign aid, making it vulnerable to state capture by economic predators.

The government is making efforts to strengthen its anti-money laundering system, including:

  • Establishing a financial intelligence unit (FIU)
  • A system for reporting suspicious transactions

However, the country’s economic regulatory environment remains weak, with limited resources available for regulation and oversight.

Civil Society and Social Protection

Kiribati lacks victim and witness support structures. However, there is a long-standing common law practice of affording protection to court witnesses.

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, but it is neither large nor diverse. Citizens have access to information, including from foreign radio services. Kiribati collaborates with NGOs to fight against overfishing and protect endangered fish and coral species.

As the country grapples with financial crimes and economic instability, experts warn that Kiribati must take immediate action to strengthen its anti-money laundering system, improve governance, and increase resources for regulation and oversight. Failure to do so could have serious consequences for the country’s economy and stability.