Financial Crime World

Assessment of Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) Measures in the Maldives

Introduction

This report provides an assessment of the AML/CFT measures in place in the Maldives at the time of the on-site visit in 2010. The report highlights several key findings that reveal significant shortcomings in the country’s ability to effectively combat money laundering and terrorist financing.

Key Findings

Money Laundering Risk

  • The financial sector in the Maldives is susceptible to money laundering, with anecdotal evidence suggesting that trafficking in illegal drugs and corruption alone produce significant amounts of illegal funds.
  • The lack of effective measures to prevent and detect money laundering poses a significant risk to the country’s financial stability.

Recent AML/CFT Framework

  • The Maldives has taken steps to lay down an AML/CFT framework, including setting up a Financial Intelligence Unit (FIU) within the central bank.
  • However, this framework is incomplete and lacks key components necessary for effective implementation.

Limited Scope of Predicate Offenses

  • Asset-generating crimes other than drug-related offenses, such as corruption, are not predicate offenses for money laundering, constituting a major shortcoming in the current AML/CFT framework.
  • This limitation hinders the country’s ability to effectively investigate and prosecute money laundering cases.
  • There are no laws or procedures 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).
  • This omission exposes the country to potential risks related to terrorist financing.

Limited Action Against Money Laundering

  • No investigation has taken place, and no charges have been brought for money laundering under the Drugs Act.
  • The lack of enforcement action undermines confidence in the effectiveness of the AML/CFT framework.

Shortcomings in Criminal Legislative Framework

  • The overall criminal legislative framework is strained by a lack of capacity in the Maldives Police Service (MPS), the Prosecutor General’s Office (PGO), and the judiciary.
  • This deficiency hampers the country’s ability to effectively investigate, prosecute, and convict money laundering cases.

Conclusion

The report highlights significant shortcomings in the Maldives’ AML/CFT framework, including limited scope of predicate offenses, lack of legal basis for freezing terrorist funds, and limited action against money laundering. These shortcomings make it challenging for the Maldives to effectively fight against money laundering and terrorist financing.