Title: Palau’s Anti-Money Laundering and Counter-Terrorist Financing Landscape: APG Evaluation

Subtitle: Key Findings, Risks, Compliance, and Recommendations

The Asia/Pacific Group on Money Laundering (APG) has published a detailed report on Palau’s Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) measures. This summary provide an overview of the report’s contents, focusing on the key findings, risks, technical compliance, and recommendations.

Background

The APG is an international organization focusing on combating money laundering and terrorist financing among its members and observers. Palau, a Pacific Island nation, underwent an evaluation to assess its AML/CTF policies, challenges, and potential improvements.

Key Findings

• Palau has identified illicit trafficking in narcotic drugs and psychotropic substances, trafficking in human beings and sexual exploitation as high-risk predicate offenses. Financial institutions (banks and money lenders) are considered high-risk; real estate agents, dealers in high-value assets, and lawyers have medium to high risks.
• Palau has a low level of risk for TF and has not encountered any cases to date. Although some government agencies are aware of the risks, the private sector’s understanding is limited.

Technical Compliance and Recommendations

The report assesses Palau’s AML/CTF measures against the FATF Recommendations. Below are some recommendations to strengthen Palau’s framework:

1. Perform risk assessment and apply a risk-based approach
2. Improve cooperation between competent authorities and develop a TF strategy
3. Enhance financial intelligence use by law enforcement agencies
4. Strengthen investigative practices
5. Implement proportionate and dissuasive sanctions
6. Effectively regulate and supervise legal entities and arrangements
7. Foster international cooperation and TFS implementation
8. Encourage preventative measures for reporting entities

Conclusion

The APG’s Mutual Evaluation Report on Palau offers valuable insights into the current status of the Pacific Island country’s AML/CTF measures. The report highlights the areas of strength and the areas for improvement, emphasizing the importance of a risk-based approach, international cooperation, and effective financial intelligence use. The recommendations provided serve as a roadmap for Palauan authorities as they work to enhance their AML/CTF regime and mitigate financial crimes.

Detailed Technical Compliance Recommendations

The report includes a technical compliance annex that elaborates on the specific recommendations and the deficiencies identified during the evaluation, along with recommendations related to target financial sanctions for terrorism and terrorism financing and for proliferation financing.