Financial Crime World

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Palau Combats Financing of Terrorism, Improves Compliance

In a significant move to combat the financing of terrorism, Palau has made progress in implementing the technical requirements of the Financial Action Task Force (FATF) Recommendations. According to the recent Mutual Evaluation 2018 report, Palau has demonstrated significant improvements in its efforts to prevent and combat terrorist financing.

Effective Implementation

The report highlights several areas where Palau has implemented FATF Recommendations effectively:

  • Risk-Based Approach: Palau has assessed risk and applied a risk-based approach to combating money laundering and terrorist financing (R.1).
  • National Cooperation: The country has demonstrated strong national cooperation and coordination with law enforcement agencies to tackle these threats (R.2).

Significant Strides

Palau has also made significant strides in implementing measures to:

  • Confiscate and Freeze Assets: Confiscate and freeze assets linked to terrorism and terrorist financing (R.4).
  • Targeted Financial Sanctions: Implement targeted financial sanctions related to both terrorism and proliferation (R.6).
  • Strengthen Laws and Regulations: Strengthen its laws and regulations on money laundering and terrorist financing, including measures to prevent the misuse of non-profit organizations (R.8).

Areas for Improvement

However, there are still areas where Palau needs to improve:

  • Financial Institution Secrecy: Not fully implemented measures to prevent financial institution secrecy (R.9).
  • Customer Due Diligence: Not required customer due diligence from financial institutions (R.10).
  • Record-Keeping Practices: Needs improvement in record-keeping practices (R.11).
  • Correspondent Banking and Money Transfer Services: Laws and regulations on correspondent banking (R.13) and money or value transfer services (R.14) are not yet fully compliant.

Commitment to Improvement

Despite these challenges, Palau has demonstrated a commitment to improving its anti-money laundering and combating terrorist financing regime. The country’s efforts have earned it a rating of “partially compliant” in several areas, indicating significant progress towards implementing the FATF Recommendations.

Way Forward

The Mutual Evaluation report provides valuable insights for Palau as it continues to strengthen its defenses against money laundering and terrorist financing. By addressing the outstanding issues identified in the report, Palau can further enhance its reputation as a reliable partner in global efforts to combat these threats.