Financial Crime World

Executive Summary

The financial sector of the Maldives is vulnerable to money laundering and terrorist financing due to the presence of significant amounts of illegal funds generated from trafficking in illegal drugs and corruption. The country has initiated steps to establish an Anti-Money Laundering/Counter-Terrorism Financing (AML/CFT) framework, including setting up a Financial Intelligence Unit (FIU) and issuing guidelines for banks and money transfer businesses.

Money Laundering

Key Findings

  • Activities other than drug trafficking do not constitute predicate offenses for money laundering.
  • Asset-generating crimes such as corruption are not considered predicate offenses for money laundering, which is a significant shortcoming of the current AML/CFT framework.
  • No investigation has taken place and no charges have been brought for money laundering under the Drugs Act.

Recommendations

  • Expand the scope of predicate offenses to include asset-generating crimes such as corruption.
  • Conduct thorough investigations and bring charges against individuals involved in money laundering activities.

Terrorist Financing

Key Findings

  • Terrorist financing is not criminalized in a separate and autonomous way, with the provision of “finance and property” for the commission of a terrorist act constituting an ancillary offense to the commission of that act.
  • No laws or procedures are in place to freeze terrorist funds or assets of persons in line with United Nations Security Council Resolutions (UNSCR) 1267 and 1373 (and their successor resolutions).

Recommendations

  • Introduce separate and autonomous legislation to criminalize terrorist financing.
  • Establish procedures to freeze terrorist funds and assets in accordance with UNSCR 1267 and 1373.

Overall Assessment

The Maldives’ AML/CFT system is strained due to a lack of capacity in the police, prosecutor general’s office, and judiciary. Shortcomings in the overall criminal legislative framework make it challenging for the Maldives to effectively combat money laundering and terrorist financing.