Financial Crime World

Maldives Money Laundering Typologies Exposed: Understanding the Threats

The Maldives, a tropical paradise in the Indian Ocean, has been facing growing concerns over money laundering and terrorist financing. The Asia/Pacific Group (APG) on Money Laundering has conducted extensive research to identify key typologies used by individuals and organizations to launder money and finance terrorism in the region.

The Role of Corruption in Facilitating Money Laundering

According to the APG’s findings, corruption plays a significant role in facilitating money laundering in the Maldives. Bribery of officials, including those in the financial sector, is a common practice that undermines anti-money laundering and combating financing of terrorism (AML/CFT) measures.

Key Money Laundering Typologies in the Maldives

The APG has identified several key money laundering typologies used in the Maldives:

Association with Corruption

  • Bribery of officials, including those in the financial sector, to facilitate money laundering.
  • Exploiting corrupt relationships to access financial systems and launder funds.

Currency Exchanges/Cash Conversion

  • Using currency exchange houses to smuggle cash out of the country or to exploit low reporting requirements.
  • Converting cash into other currencies or assets to avoid detection.

Cash Couriers/Currency Smuggling

  • Concealing large amounts of cash to avoid transaction and cash reporting measures.
  • Transporting cash across borders using various methods, including smuggling.

Structuring/Smurfing

  • Making numerous small transactions through various accounts to avoid detection threshold reporting obligations.
  • Breaking up large transactions into smaller ones to evade reporting requirements.

Use of Credit Cards/Cheques/Promissory Notes

  • Using these instruments to access funds held in a financial institution, often in another jurisdiction.
  • Exploiting the relative ease of using credit cards and cheques to transfer funds.

Terrorist Financing Typologies

The APG has also identified several terrorist financing typologies used in the Maldives:

Abuse of Non-Profit Organizations (NPOs)

  • Using NPOs to raise and distribute terrorist funds.
  • Exploiting the perceived legitimacy of NPOs to channel funds to terrorist groups.

Investment in Capital Markets

  • Investing in negotiable instruments, often exploiting relatively low reporting requirements.
  • Using capital markets to transfer funds to terrorist groups or individuals.

New Payment Technologies and Virtual Assets

The APG warns that emerging payment technologies and virtual assets are being exploited by money launderers and terrorist financiers in the Maldives. Examples include:

  • Cell phone-based remittance and payment systems
  • The exploitation of regulatory gaps in AML/CFT
  • The lack of supervision of virtual asset service providers

Conclusion

The APG’s research highlights the importance of understanding the money laundering and terrorist financing typologies used in the Maldives. By identifying these threats, decision-makers, policy experts, and law enforcement authorities can develop effective strategies to combat these crimes and protect the financial system.