Financial Crime World

Financing Terrorism and Money Laundering: A Growing Concern in the Maldives

The Maldives, known for its crystal-clear waters and white sandy beaches, has faced international scrutiny due to allegations of financial crimes, including money laundering and terrorism financing.

Overview

This article provides a summary of the measures in place in the Maldives during an onsite visit in October 2010 and progress made since then to combat these illicit activities.

The Financial Sector in the Maldives

The financial sector in the Maldives includes banks, nonbank financial institutions, and insurance intermediaries. In 2010, the authorities strengthened customer identification procedures, ensured due diligence measures, and implemented reporting requirements.

Banks

Banks in the Maldives were required to:

  • Establish internal control systems
  • Implement risk management policies
  • Cooperate with law enforcement agencies for confiscating property obtained from criminal activities

Financial Intelligence Unit

The authorities established a Financial Intelligence Unit (FIU) to:

  • Provide intelligence to law enforcement agencies
  • Assist in terrorist financing investigations

The Maldives enacted criminal legislation against terrorist financing, money laundering, and the financing of terrorism. The authorities also introduced regulations on:

  • Reporting of unusual transactions
  • Confiscation of criminal proceeds
  • Freezing of terrorist assets

Challenges

Despite these efforts, challenges remain:

  • Sufficient resources for regulatory authorities
  • Limited international cooperation
  • Weak law enforcement capacity

Recent Initiatives

The Maldivian government collaborates with international organizations:

  • Establishment of a National Risk Assessment Committee
  • Implementation of a licensing system for money remitters
  • Introduction of a registry for beneficial owners of legal entities

Concerns and Recommendations

Money laundering and terrorism financing remain a concern due to:

  • Porous borders
  • Lack of comprehensive financial intelligence
  • Reliance on the informal sector

The Maldives faces the following recommendations:

  • Strengthen efforts to combat financial crimes
  • Ensure the safety and security of citizens and financial system
  • Cooperate with international counterparts to prevent financing of terrorism.

The Maldives is committed to upholding international standards and continues to collaborate with international organizations to combat financial crimes and prevent terrorism financing.

Future Challenges

The future holds challenges for the Maldives, but with international support, a strong commitment from the government, and a robust AML/CFT framework, the islands can turn the tide against financial crimes.