Financial Crime World

Maldives Making Strides in Anti-Money Laundering and Counterterrorist Financing Framework

The Government of Maldives has been proactive in establishing an Anti-Money Laundering and Counterterrorist Financing (AML/CFT) framework. This article analyzes the current measures in place, identifies areas for improvement, and offers recommendations.

Assessment against FATF Recommendations

In October 2010, an onsite visit was conducted to review Maldives’ AML/CFT measures. The country was assessed against the Recommendations of the Financial Action Task Force (FATF). While progress has been made in preventing money laundering and terrorist financing, several areas require improvement.

Customer Due Diligence

One crucial area for improvement is customer due diligence:

  • Verifying identities: Maldives needs to enhance its ability to identify customers accurately. This includes implementing robust Know Your Customer (KYC) procedures.
  • Assessing risks: The country should assess risks associated with customers and their transactions. This can help prevent financial crime from occurring.

Preventing and Detecting Suspicious Transactions

Another critical area is the ability to prevent and detect unusual or suspicious transactions, particularly those linked to terrorism financing:

  • Transaction monitoring: Implementing advanced transaction monitoring systems can help detect suspicious activities.
  • Reporting and investigation: Ensuring that financial institutions report and investigate suspicious transactions effectively is essential.

Financial Inclusion Tools

Increasing the use of financial inclusion tools such as digital identification, e-wallets, and mobile money can help prevent criminal activity:

  • Access to financial services: These tools increase access to financial services for all citizens, reducing the reliance on cash and informal financial networks.
  • Transparency: Digital transactions leave a paper trail, making it easier to monitor and detect suspicious activities.

Consistent Risk-Based Approach

Maldives has made progress in preventing money laundering and terrorist financing through a risk-based approach. However, there is still room for improvement in ensuring that this approach is consistently applied across all sectors and institutions:

  • Training and awareness: Providing training and raising awareness about the importance of a risk-based approach can help ensure its effective implementation.
  • Regulation and supervision: Effective regulation and supervision are necessary to enforce the consistent application of a risk-based approach.

Conclusion

While Maldives has taken significant steps in establishing an AML/CFT framework, there is still room for improvement:

  • Customer due diligence: Enhancing identity verification and assessing customer risks can help prevent financial crime.
  • Financial inclusion tools: Increasing the use of digital identification, e-wallets, and mobile money can make transactions more transparent and reduce reliance on cash.
  • Consistent risk-based approach: Applying a consistent risk-based approach across all sectors and institutions is crucial to effectively prevent financial crime.