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Palau Fails to Meet FATF Regulatory Requirements

In its latest assessment, Palau has been found to be “partially compliant” with the Financial Action Task Force (FATF) recommendations on combating money laundering and terrorist financing. The country’s Mutual Evaluation Report for 2018 revealed several areas where it needs to improve its regulatory framework.

Key Areas of Non-Compliance

• Assessing risk and applying a risk-based approach
• National cooperation and coordination
• Confiscation and provisional measures
• Laws on money laundering, terrorist financing, and targeted financial sanctions related to terrorism and terrorist financing

Palau received low ratings in these areas, indicating significant room for improvement.

Areas of Compliance

• Customer due diligence
• Record keeping
• Reporting of suspicious transactions

While Palau performed well in these areas, it still needs to address several deficiencies to bring its regulatory framework up to international standards.

Deficiencies and Improvement Needs

• Strengthening laws on financial institution secrecy
• Correspondent banking
• Money or value transfer services
• Regulation and supervision of financial institutions, DNFBPs (designated non-financial businesses and professions), and cash couriers
• International cooperation in areas such as mutual legal assistance, extradition, and freezing and confiscation of assets

Concerns and Recommendations

Palau’s lack of compliance with FATF recommendations raises concerns about its ability to effectively prevent money laundering and terrorist financing. The country must take immediate action to address these deficiencies and bring its regulatory framework in line with international standards.

In conclusion, Palau’s partial compliance with FATF recommendations highlights the need for urgent improvement and increased efforts to combat money laundering and terrorist financing.