Financial Crimes Rampant in Kiribati

Kiribati, a small island nation in the Pacific Ocean, has been plagued by financial crimes, including tax evasion and cyber-enabled frauds such as internet scams and phishing.

Vulnerability to De-Risking

According to recent reports, Kiribati’s financial system is vulnerable to de-risking, a phenomenon where international banks withdraw their services from countries deemed high-risk due to concerns over financial crime. This has led to a negative assessment of the country’s measures to enhance compliance-related tools, capabilities, and technical competence.

Organized Crime Presence

While Kiribati has a relatively low presence of organized crime, it is not immune to it. Small, loosely organized criminal networks operate in the country, particularly in human trafficking and fauna crime, including illegal fishing.

Corruption

Corruption is also a significant problem in Kiribati, with petty corruption and nepotism widespread. However, there are efforts underway to improve anti-corruption measures, although some community structures and the small population base can hinder more profound institutional change.

Legislative Framework

The country’s legislative framework is sound and addresses organized crime, but its capacity to combat overfishing of endangered species is lacking. Kiribati works with other countries to identify drug trafficking, but lacks the equipment and skills to accurately assess seizures.

Economic Environment

Kiribati’s economic environment is vulnerable to state capture by economic predators due to its heavy reliance on foreign aid and remittances from overseas workers. The country’s limited resources to fight money laundering and terrorist financing also pose challenges.

Financial Intelligence Unit (FIU)

Despite these challenges, Kiribati has established a financial intelligence unit (FIU) and a system for reporting suspicious transactions. However, the report notes that the country remains highly dependent on foreign aid and economic development is constrained by a shortage of skilled workers, weak infrastructure, and remoteness from international markets.

Countering Organized Crime

The lack of resources devoted to countering organized crime is due in part to the absence of serious organized crime in the country, which has led to a focus on community crime prevention. However, Kiribati is only recently becoming aware of cybercrimes and is working to develop a more preventive approach to policing.

Conclusion

In conclusion, Kiribati’s financial system is vulnerable to de-risking and corruption, and its capacity to combat overfishing and other organized crimes is limited. While there are efforts underway to improve anti-corruption measures and develop a more preventive approach to policing, the country still faces significant challenges in fighting financial crimes.