Financial Crime World

Solomon Islands’ Financial System Exposed to Money Laundering Risks

Report Highlights Vulnerability of Financial System to Corruption and Money Laundering

A recent report has highlighted the vulnerability of Solomon Islands’ financial system to money laundering and corruption, citing a lack of effective supervision and inadequate resources.

Small Industries Financing Institution (SIFIU) Lacks Effective Supervision

The report reveals that SIFIU, responsible for analyzing suspicious transaction reports related to money laundering and its predicate offences, is not under active anti-money laundering supervision. Despite providing guidelines and feedback to financial institutions and intelligence to the Royal Solomon Islands Police Force (RSIPF), SIFIU lacks capacity and is understaffed.

RSIPF Lacks Expertise and Personnel to Investigate Sophisticated Financial Crimes

The report also notes that the RSIPF does not have the expertise or personnel to investigate sophisticated financial crimes, focusing instead on self-laundering cases. This lack of effort has resulted in few money laundering convictions between 2013 and 2021.

Task Force Janus and Independent Commission against Corruption (ICAC) Need Improved Resources

Task Force Janus, established in 2016 to investigate fraud and corruption, is seen as a positive development. However, the report highlights the need for improved resources and capacity to effectively combat financial crimes. The ICAC, established under the Anti-Corruption Act 2018, is still in the process of being fully established.

Limited Success in Confiscation of Criminal Proceeds

Confiscation of criminal proceeds is also an issue, with laws largely compliant with FATF Recommendation 4 but limited success in achieving confiscation orders. The Office of the Director of Public Prosecutions (ODPP) does not have a focus on confiscation of criminal proceeds, and it usually takes several years to achieve a successful confiscation order.

Recommendations for Action

The report makes five recommendations for action:

  • Review customer due diligence requirements to ensure alignment with FATF.
  • Strengthen the framework around the confiscation of criminal proceeds.
  • Ensure the FIU is adequately staffed, resourced, and trained.
  • Improve information sharing between anti-corruption agencies and the FIU.
  • Build improved capacity for cross-border cooperation in anti-corruption and AML.

Commitment from Stakeholders Essential to Combat Money Laundering and Corruption

The report highlights the importance of commitment from all stakeholders to combat money laundering and corruption in Solomon Islands. Effective action is needed to address these issues and ensure the country’s financial system is protected against exploitation.