Financial Crime World

Palau’s Anti-Money Laundering and Counter-Terrorist Financing Efforts Face Challenges

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Introduction

Washington D.C., March 2017 - The National Rifle Association (NRA) has released a report highlighting the challenges faced by Palau in its efforts to combat money laundering and terrorist financing.

Key Findings

  • Palau’s Financial Intelligence Unit (FIU) provides decent quality financial intelligence and other relevant information to law enforcement agencies and prosecutors, but there is limited understanding among law enforcement agencies of the benefits and use of financial intelligence.
  • Law enforcement agencies do not undertake a proactive approach to carrying out parallel financial investigations on predicate and related money laundering offenses.
  • Palau’s private sector reporting entities exhibit very limited and in some cases negligible understanding of anti-money laundering (AML) and counter-terrorist financing (CFT) risks facing the country.
  • There is no documented AML/CFT strategy or policy informed by risk to address money laundering and terrorist financing risks in Palau.

Positive Developments

  • The formation of the National Economic Agency (NEA) and the development of a Human Trafficking Task Force are positive steps taken by Palau.
  • The country’s Financial Confidential Intelligence Unit (FCIU) has improved coordination between competent authorities.

Recommendations

High-Risk Predicate Offenses

  • Illicit trafficking in narcotic drugs and psychotropic substances
  • Trafficking in human beings and sexual exploitation

Conclusion

While Palau faces significant challenges in its efforts to combat money laundering and terrorist financing, there is a sound level of cooperation between competent authorities at both strategic and operational levels. However, further analysis is required to address the country’s AML/CFT risks and develop an effective strategy to tackle money laundering and terrorist financing.

Recommendations for Improvement

  • Conduct a comprehensive risk assessment to improve understanding of AML/CFT risks facing Palau.
  • Educate private sector reporting entities on AML/CFT risks and requirements.
  • Develop a documented AML/CFT strategy or policy informed by risk to address money laundering and terrorist financing risks.
  • Law enforcement agencies should undertake a proactive approach to carrying out parallel financial investigations on predicate and related money laundering offenses.
  • The FIU should conduct strategic analysis of the data received from foreign banks and reporting entities.

By addressing these challenges, Palau can improve its efforts to combat money laundering and terrorist financing and protect its financial system from illicit activities.