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Maldives Struggles to Combat Money Laundering and Terrorist Financing

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A recent report by the International Monetary Fund (IMF) has highlighted significant shortcomings in the Maldives’ anti-money laundering (AML) and counter-terrorist financing (CFT) regime.

Criticism of Maldivian Authorities

The report, presented at the Asia/Pacific Group on Money Laundering (APG) 14th Annual Meeting, criticized the Maldivian authorities for failing to effectively combat money laundering and terrorist financing. The country’s AML/CFT framework is marred by a lack of resources, capacity, and legal basis for key institutions, including the Financial Intelligence Unit (FIU).

Shortcomings in AML/CFT Regime

The report identified several major shortcomings in the Maldives’ AML/CFT regime, including:

Lack of criminalization: Lack of criminalization of money laundering offenses beyond drug-related crimes
Limited confiscation powers: Limited confiscation powers and no possibility to confiscate property of corresponding value
Insufficient action against money laundering: Insufficient action against money laundering, with no investigations or charges brought under the Drugs Act
No laws for freezing terrorist funds: No laws or procedures in place to freeze terrorist funds or assets in line with United Nations Security Council Resolutions (UNSCR)
Limited capacity and resources: Limited capacity and resources of competent authorities, including the Maldives Police Service, Prosecutor General’s Office, and judiciary

Challenges Posed by Criminal Legislative Framework

The report also highlighted the challenges posed by the country’s criminal legislative framework, particularly with respect to criminal procedure. The slow and uncertain criminal process hinders efforts to effectively combat money laundering and terrorist financing.

IMF Recommendations

In response to these findings, the IMF has recommended that the Maldivian authorities take immediate steps to strengthen their AML/CFT regime. This includes:

Criminalize money laundering offenses: Criminalizing money laundering offenses beyond drug-related crimes
Enhance confiscation powers: Enhancing confiscation powers and procedures
Increase action against money laundering: Increasing action against money laundering, including investigations and prosecutions
Implement laws for freezing terrorist funds: Implementing laws and procedures to freeze terrorist funds or assets in line with UNSCR
Strengthen capacity and resources: Strengthening the capacity and resources of competent authorities

Government Response

The Maldivian government has pledged to address these shortcomings and strengthen its AML/CFT regime. The country’s failure to effectively combat money laundering and terrorist financing poses significant risks to the stability of its financial system and the integrity of international trade.