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Palau’s Anti-Money Laundering and Combating the Financing of Terrorism Efforts Fall Short Without Additional Resources

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Palau’s efforts to combat money laundering and terrorist financing are hindered by a lack of dedicated resources. The country’s Financial Intelligence Unit (FIU) has been operating without full-time staff since its inception in 2001.

Challenges Facing the FIU

• The FIU, responsible for analyzing and disseminating suspicious transaction reports (STRs), has processed 71 STRs to date.
• However, the lack of dedicated staffing resources and documented standard operating procedures hinders its effectiveness.
• “The FIU’s ability to effectively combat money laundering and terrorist financing would be significantly enhanced with dedicated full-time staff,” said [Name], Director of the Financial Intelligence Unit.

Legal Framework Shortcomings

• Palau’s law criminalizes money laundering, but eight out of 20 FATF-designated categories of predicate offenses are not covered by the offense.
• The country has not conducted any investigations or prosecutions related to terrorist financing since the enactment of its anti-terrorism financing law in April 2007.
• The freezing measures for terrorist assets under UN Security Council Resolutions 1267 and 1373 are inadequate, with no procedures in place to ensure that terrorist funds are frozen immediately.

Recommendations

Strengthening AML/CFT Systems

1. Allocate dedicated full-time resources to the Financial Intelligence Unit to enhance its effectiveness.

2. Develop and implement documented standard operating procedures for STR analysis and dissemination.

3. Provide additional information from reporting entities in response to STRs without the need for a court order.

4. Start providing STR forms, guidelines, and feedback on the STRs to reporting entities.

5. Strengthen Palau’s legal framework to cover all predicate offenses related to money laundering.

Contact

For more information, please contact [Name], Director of the Financial Intelligence Unit, at [Email] or [Phone].