Financial Crime World

Palau Fails to Meet International Standards on Anti-Money Laundering and Combating the Financing of Terrorism

A recent assessment by the Financial Action Task Force (FATF) has revealed that Palau has failed to meet international standards on anti-money laundering (AML) and combating the financing of terrorism (CFT). The report highlights several areas where Palau falls short in implementing the technical requirements of the FATF Recommendations.

Areas of Non-Compliance

The assessment found that Palau is partially compliant with only a few aspects, including:

  • Assessing risk and applying a risk-based approach
  • Having laws in place to confiscate proceeds of crime

However, Palau has failed to implement measures to combat money laundering and terrorist financing in several key areas, including:

  • Effective national cooperation and coordination between its financial intelligence unit, law enforcement agencies, and other relevant authorities
  • A sufficient framework for combating the financing of terrorism and terrorist financing offences
  • Laws that provide for the confiscation of proceeds of crime
  • Measures to prevent the misuse of companies and other legal arrangements
  • Adequate internal controls and risk management systems in financial institutions

Concerns about Palau’s Ability to Prevent Money Laundering and Terrorist Financing

The FATF Recommendations are a set of international standards aimed at preventing the laundering of money and the financing of terrorism. The recommendations provide guidance on various aspects of AML/CFT, including assessing risk, national cooperation, money laundering and terrorist financing offences, confiscation and provisional measures, targeted financial sanctions, and more.

Palau’s failure to meet these standards raises concerns about its ability to prevent money laundering and terrorist financing activities within its borders. The country’s financial institutions, as well as individuals and businesses operating in Palau, may be at risk of being used for illegal purposes if the necessary measures are not put in place.

Recommendations for Improvement

The report recommends that Palau take immediate action to address these shortcomings and improve its AML/CFT regime. It also calls on international partners to provide assistance and support to help Palau implement the necessary reforms.

Key Takeaways

  • Palau has failed to meet international standards on anti-money laundering and combating the financing of terrorism
  • The country lacks effective national cooperation and coordination, as well as a sufficient framework for combating terrorist financing
  • Palau’s laws do not provide for the confiscation of proceeds of crime or measures to prevent the misuse of companies and other legal arrangements
  • Financial institutions in Palau lack adequate internal controls and risk management systems
  • International partners are urged to provide assistance and support to help Palau implement necessary reforms.