Financial Crime World

Maldives Fails to Meet International Anti-Money Laundering and Combating Financing of Terrorism Standards

The Maldives has failed to meet international standards on anti-money laundering (AML) and combating the financing of terrorism (CFT), according to a recent assessment.

Assessment Highlights Significant Gaps in AML/CFT Framework

The assessment, conducted by an international team, found that while the country has taken some steps to implement AML/CFT measures, they do not fully conform with the Financial Action Task Force (FATF) standard. The main issues identified include:

  • Lack of Primary or Secondary Legislation: There is no primary or secondary legislation on AML/CFT, which makes it difficult for the country to meet international standards.
  • Inadequate Banking Act: The 2010 Banking Act sets out some CDD and record-keeping obligations for banks, but these requirements are not sufficient to meet international standards.
  • Insufficient Securities Sector Measures: The measures for intermediaries in the securities sector issued in 2010 have a legal basis that is insufficient to meet FATF requirements.

Monitoring and Supervision Issues

The assessment also highlighted issues with monitoring and supervision of banks’ and securities intermediaries’ compliance with AML/CFT requirements. Specifically:

  • Lack of Formal Monitoring: The Maldives Monetary Authority (MMA) and the Capital Market Development Authority (CMDA) have yet to establish a comprehensive system for tracking suspicious transactions.
  • Insufficient Staff Numbers and Training: The authorities should increase their staff numbers and provide training for AML/CFT expertise.

Transparency and Beneficial Ownership Issues

The assessment also highlighted the need for greater transparency in legal persons and arrangements, as well as non-profit organizations (NPOs). Specifically:

  • Lack of Transparency: The current framework does not ensure sufficient transparency of legal entities, nor timely access to beneficial ownership and control information.
  • Vulnerability of NPOs: NPOs are particularly vulnerable to terrorist financing risks, but there is no coordinated national strategy to protect them from abuse.

Recommendations for Improvement

The assessment concluded that the Maldives has significant gaps in its AML/CFT framework, which needs to be addressed to meet international standards. The recommended steps include:

  • Passing Key Legislation: Key pieces of legislation, including comprehensive AML/CFT legislation, a revised Penal Code, and criminal procedure rules, need to be passed.
  • Increasing Staff Numbers and Training: The authorities should increase their staff numbers and provide training for AML/CFT expertise.
  • Implementing Monitoring and Supervision Systems: The MMA and CMDA should establish a comprehensive system for tracking suspicious transactions.

Overall, the assessment emphasizes the need for the Maldives to address its significant gaps in its AML/CFT framework to meet international standards.