Financial Crime World

Maldives Falls Short in Fight Against Money Laundering and Terrorist Financing

A recent report by the International Monetary Fund (IMF) has highlighted significant shortcomings in the Maldives’ efforts to combat money laundering and terrorist financing. The assessment, conducted at the request of the Asia/Pacific Group on Money Laundering (APG), found that the country’s financial system remains vulnerable to illicit activities.

Key Weaknesses

  • Lack of a comprehensive legal framework to criminalize money laundering and terrorist financing
  • No investigations or charges brought for money laundering under the Drug Act, despite drug trafficking being a frequent asset-generating crime in the Maldives
  • Activities other than those listed in the Drugs Act do not constitute predicate offenses for money laundering, creating a major shortcoming in the current AML/CFT framework
  • Terrorist financing is not criminalized in a separate and autonomous way, making it difficult to effectively combat this threat

Failure to Implement UN Security Council Resolutions

  • The Maldives failed to freeze terrorist funds or assets in line with United Nations Security Council Resolutions (UNSCR) 1267 and 1373
  • No legal basis for requiring financial institutions to compare their client lists with the consolidated list of designated individuals and entities

Shortcomings in Criminal Legislative Framework

  • Slow pace of the criminal process and lack of resources in competent authorities hinder the country’s ability to effectively fight against money laundering and terrorist financing
  • Limited provisions on criminal procedure, making it difficult to investigate and prosecute financial crimes

Positive Steps Taken

  • Establishment of a Financial Intelligence Unit (FIU) within the central bank
  • Issuance of an AML/CFT Circular to banks and money transfer businesses

Urgent Need for Reform

Despite some positive steps taken by the Maldives, the country has been urged to address its weaknesses and strengthen its AML/CFT framework to prevent the misuse of its financial system and protect its citizens from the threat of money laundering and terrorist financing.