Palau Takes Steps to Enhance Anti-Money Laundering Efforts

Introduction

The Pacific island nation of Palau has made significant strides in combating money laundering and terrorism financing, according to a recent evaluation by the Asian-Pacific Group (APG). As a member of the APG since 2002, Palau has demonstrated a reasonable understanding of its risks in these areas.

National Risk Assessment

In 2017, Palau conducted its first national risk assessment, which helped identify vulnerabilities that could be exploited by money launderers and terrorist financiers. This assessment provided a critical foundation for the government’s efforts to mitigate these risks.

• Key agencies established:
  • Financial Crime Investigations Unit (established in late 2016)
  • Narcotics Enforcement Agency (established in March 2017)
  • Human Trafficking Task Force (established in October 2017)

Legislative Reforms

The government implemented legislative reforms through the issuance of the Money Laundering Act in 2014. This strengthened Palau’s legal framework and provided a robust foundation for its anti-money laundering efforts.

• Key provisions:
  • Strengthened penalties for money laundering offenses
  • Improved reporting requirements for financial institutions
  • Enhanced cooperation between law enforcement agencies

APG Evaluation

The Asian-Pacific Group (APG) conducted Palau’s third mutual evaluation in 2018, which assessed the country’s compliance with international standards on anti-money laundering and combating the financing of terrorism. The full report is available online and provides a comprehensive overview of Palau’s progress in this area.

• Key findings:
  • Palau has demonstrated a reasonable understanding of its risks in money laundering and terrorism financing.
  • The country has established key agencies to mitigate these risks.
  • Legislative reforms have strengthened Palau’s legal framework.