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Solomon Islands Lacks Effective Anti-Money Laundering and Counter-Terrorist Financing Measures

Honiara, Solomon Islands - A recent assessment by the Asia-Pacific Group on Money Laundering (APG) has revealed that Solomon Islands lacks a comprehensive legal framework to combat money laundering and counter-terrorist financing.

Shortcomings in Anti-Money Laundering and Counter-Terrorist Financing Measures

The report highlights several shortcomings in the country’s anti-money laundering and counter-terrorist financing measures. One of the key concerns is:

  • Lack of Supervision: Financial institutions and designated non-financial businesses and professions (DNFBPs) lack supervision over implementing anti-money laundering and counter-terrorist financing requirements.
  • Limited Understanding: Local banks, credit unions, and DNFBPs have limited understanding of anti-money laundering and counter-terrorist financing requirements, despite not engaging in international fund transfers.

Additional Concerns

The APG assessment also highlighted the following concerns:

  • Lack of Regulation over Non-Profit Organizations (NPOs): NPOs are considered high-risk for money laundering and terrorist financing but lack regulation and monitoring.
  • Insufficient Measures for Politically Exposed Persons (PEPs) and Sanctioned Individuals and Entities (SIFE): There is no legal framework or policies to deal with PEPs and SIFE, and smaller financial institutions and DNFBPs have not implemented automated screening measures.

Other Shortcomings

The report also identified the following shortcomings:

  • Lack of Customer Due Diligence: Reporting entities lack customer due diligence requirements.
  • Limited Understanding of Money Laundering and Terrorist Financing Risks: Financial institutions lack understanding of money laundering and terrorist financing risks.
  • Inadequate Verification Tools: There is a lack of verification tools to verify customer identity.

Recommendations

The report recommends that Solomon Islands:

  • Establish a comprehensive legal framework and policies to combat money laundering and counter-terrorist financing.
  • Improve supervision over financial institutions and DNFBPs.
  • Enhance the regulation of NPOs.

Background

The APG assessment was conducted in 2019 as part of its annual peer review process. The organization provides technical assistance and training to member countries to help them strengthen their anti-money laundering and counter-terrorist financing regimes.