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Money Laundering Techniques in Aruba: A Growing Concern

Aruba’s economy, primarily based on tourism and oil refining, has been plagued by money laundering techniques over the past decade. The island’s geographical location and travel facilities have made it a hub for drug trafficking, with risks identified in the real estate and jewelry sectors as well as through exempt companies.

Offshore Activities Pose Significant Risks

According to experts, Aruba’s off-shore activities, including offshore banks and companies, pose a significant risk for misuse by launderers and other criminals. The lack of transparency and integrity in these vehicles has been a major concern, despite efforts to regulate trust and company service providers.

Inadequate Prosecution Action Against Terrorist Financing

Aruba enhanced its money laundering offense in 2006, but the country still lacks effective prosecution action against terrorist financing. In fact, Aruba has chosen not to criminalize terrorist financing as required by international standards, citing existing provisions of the Criminal Code. Experts argue that this approach is inadequate and urge the government to take urgent action to implement United Nations Security Council Resolutions 1267 and 1373.

Fragmented AML/CFT Regime

The country’s system for preventing money laundering and combating the financing of terrorism (AML/CFT) is incomplete and lacks coherence. Aruba’s AML/CFT regime is fragmented, with multiple agencies responsible for different aspects of the system.

Financial Institutions Not Subject to AML/CFT Requirements Pose Significant Risks

Financial institutions that are neither regulated nor supervised pose a significant risk, as they are not subject to AML/CFT requirements. The country’s basic preventive legislation has many gaps relative to international standards, and there is a lack of clarity and consistency in the scope and extent of obligations.

Recommendations for Improvement

Experts recommend that Aruba rectify these deficiencies by preparing new and coherent legislation that implements all Financial Action Task Force (FATF) requirements. The supervision of financial institutions should also be reorganized and strengthened, with a focus on introducing a robust enforcement culture.

International Cooperation Essential

International cooperation is essential in combating money laundering and terrorist financing. While Aruba has a basic system in place, enhancements are needed at both the judicial and administrative levels. The country’s legislation should also be reviewed and updated to ensure that it meets international standards.

Conclusion

In conclusion, money laundering techniques in Aruba pose a significant risk to the country’s economic stability and financial security. Urgent action is needed to strengthen the AML/CFT regime, regulate offshore activities, and enhance international cooperation.