Palau’s Anti-Money Laundering and Counter-Terrorism Financing Efforts Hampered by Lack of Resources
Challenges in Combating Money Laundering and Terrorist Financing
A recent assessment by international authorities has highlighted the challenges facing Palau’s efforts to combat money laundering and terrorist financing. Despite making significant strides in enacting relevant laws and regulations, the country’s ability to effectively implement these measures is being hindered by a lack of dedicated resources.
Crime Rate and Vulnerabilities
According to the report, Palau’s crime rate remains relatively low, with prostitution and consumer marijuana sales posing the greatest threat to its financial stability. However, the country’s reliance on tourism, agriculture, and fishing makes it vulnerable to organized criminal activity, particularly in the form of illegal fishing by unlicensed foreign vessels.
Money Laundering and Predicate Offenses
While money laundering is criminalized under Palauan law, a significant shortcoming remains in that eight out of twenty FATF-designated categories of predicate offenses are not covered. Furthermore, the country has only prosecuted six cases of money laundering offenses to date.
Counter-Terrorism Act and Confiscation Measures
The report notes that Palau’s newly enacted Counter-Terrorism Act (CTA) criminalizes the financing of terrorism largely in line with international standards. However, as no investigations or prosecutions have been conducted under this act, it remains unclear how effective it will be in practice.
Palauan law allows for the criminal confiscation of proceeds from money laundering and terrorist financing offenses, but only property related to these crimes can be seized. The report highlights the need for additional measures to be taken to identify and trace property linked to predicate offenses.
Financial Intelligence Unit (FIU)
The FIU plays a crucial role in Palau’s anti-money laundering and counter-terrorism financing efforts. However, it has been operating without dedicated full-time resources since its inception in 2001. Despite this, the FIU has processed 71 suspicious transaction reports (STRs), including disseminating them to the Division of Criminal Investigation & Drug Enforcement for investigation.
However, the report notes that the FIU’s effectiveness would be enhanced by:
- Dedicated staffing resources
- Documented standard operating procedures on STR analysis and dissemination
- The ability to obtain additional information from reporting entities without the need for a court order
- Feedback to reporting entities on their submissions
Division of Criminal Investigation & Drug Enforcement (CID)
The CID is responsible for investigating money laundering and terrorist financing cases, but has not initiated an investigation into either offense that was not related to an STR. The report highlights the need for additional resources and training to enable the CID to effectively investigate these complex crimes.
Conclusion
In conclusion, while Palau has made significant strides in enacting relevant laws and regulations, its ability to effectively implement these measures is being hindered by a lack of dedicated resources. Without additional support, the country’s anti-money laundering and counter-terrorism financing efforts remain at risk of being undermined.