Financial Crime World

Maldives Falls Short in Fight Against Money Laundering and Terrorist Financing

Cochin, India - A report by the International Monetary Fund (IMF) has revealed significant weaknesses in the Maldives’ anti-money laundering (AML) and counter-terrorism financing (CFT) systems.

Major Shortcomings

  • The country’s criminal legislative framework is inadequate, with no laws or procedures in place to freeze terrorist funds or assets of persons designated under United Nations Security Council Resolutions (UNSCR) 1267 and 1373.
  • Terrorist financing was not criminalized in a separate and autonomous way, with only ancillary offenses related to the commission of terrorist acts being defined.
  • Activities other than drug-related offenses do not constitute predicate offenses for money laundering, creating ambiguity in the authorities’ minds as to the precise scope of the offense.

Lack of Capacity

  • The Maldives suffers from a lack of capacity in its police service, prosecutor general’s office, and judiciary, making it challenging for the country to fight effectively against money laundering and terrorist financing.
  • The Financial Intelligence Unit (FIU) set up within the central bank in 2004 did not become operational until 2006, and its initial circular only addressed anti-money laundering measures.

Recommendations

Strengthen AML/CFT Framework

  • Criminalize terrorist financing and other activities that pose a risk to the country’s financial system.
  • Establish a separate and autonomous offense for terrorist financing.
  • Introduce laws and procedures to freeze terrorist funds and assets.

Improve Criminal Procedure Rules

  • Streamline the criminal process to reduce delays and legal uncertainty.

Increase Resources and Capacity

  • Enhance the capacity of the police service, prosecutor general’s office, and judiciary to investigate and prosecute money laundering and terrorist financing cases.
  • Provide resources and training to support the country’s efforts to combat these threats.

Key Findings

  • No laws or procedures in place to freeze terrorist funds or assets
  • Terrorist financing not criminalized in a separate and autonomous way
  • Activities other than drug-related offenses do not constitute predicate offenses for money laundering
  • Criminal process slow and fraught with legal uncertainty
  • Lack of capacity in police service, prosecutor general’s office, and judiciary