Financial Crime World

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Money Laundering in Aruba: A Growing Concern

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Aruba, a small island nation in the southern Caribbean, has been grappling with the issue of money laundering for several years. Despite its relatively low level of criminality compared to other countries, Aruba’s geographical location and travel facilities make it an attractive destination for drug traffickers and other criminals seeking to launder their ill-gotten gains.

Economic Diversification and Offshore Activities

According to a recent report by the Financial Action Task Force (FATF), Aruba’s economy is largely based on tourism and oil refining, but the island has been actively seeking to diversify its economy through off-shore activities. This has led to the licensing of offshore banks and the development of offshore companies, which poses significant risks for money laundering and terrorist financing.

Weaknesses in Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Measures

The report highlights several weaknesses in Aruba’s AML/CFT measures. For instance:

  • Trust and company service providers (TCSPs) are not subject to basic AML/CFT requirements, making it easy for criminals to misuse these vehicles.
  • Aruban corporate vehicles represent a substantial risk for misuse by launderers and other criminals.

Failure to Criminalize Terrorist Financing

The report also criticizes Aruba’s failure to criminalize terrorist financing as required by the United Nations Security Council (UNSC) resolutions 1267 and 1373. The assessment team urges Aruba to urgently implement these measures to prevent the misuse of its financial system.

Steps Taken by Aruba

Aruba has taken some steps to improve its AML/CFT regime, including:

  • Enhancing its ML offence in 2006
  • Introducing new legislation aimed at regulating trust and company service providers

Recommendations for Improvement

The report recommends that Aruba:

  • Urgently review the structure of its AML/CFT regime, including its legislation
  • Dedicate more resources to the agencies responsible for implementing these measures
  • Introduce clearer defined tasks and priorities for each agency
  • Develop a significantly more robust enforcement culture

Additionally, the report suggests that Aruba should consider preparing completely new and coherent legislation dealing with all the deficiencies in its current AML/CFT framework.

Conclusion

In conclusion, money laundering remains a significant concern in Aruba, and the country needs to take urgent action to strengthen its AML/CFT regime. The FATF report provides a comprehensive analysis of Aruba’s AML/CFT measures and offers recommendations for improvement. By implementing these recommendations, Aruba can better prevent the misuse of its financial system and maintain its reputation as a responsible member of the international community.