Palau’s Financial Institution Risk Assessment Receives Mixed Ratings

Palau has received a mixed bag of ratings from the Financial Action Task Force (FATF) in its latest mutual evaluation, assessing the country’s implementation of anti-money laundering and combating the financing of terrorism (AML/CFT) measures.

Compliance with FATF Recommendations

According to the report, Palau is:

• Partially compliant with 14 out of 40 FATF Recommendations
• Largely compliant with 15
• Non-compliant with 7

The country was found to be compliant only with one recommendation related to financial institution secrecy laws.

Risk Assessment and National Cooperation

In terms of risk assessment and application of a risk-based approach, Palau was rated as partially compliant. However, it was deemed to have made significant progress in strengthening its national cooperation and coordination on AML/CFT matters, and was given a largely compliant rating in this area.

Areas for Improvement

The report highlighted areas where Palau needs improvement, including:

• The need for more effective measures to prevent terrorist financing
• The requirement for greater transparency and beneficial ownership of legal persons and arrangements

Financial Intelligence Unit

Palau’s financial intelligence unit was praised for its efforts to identify and track suspicious transactions. However, the country was found to be non-compliant in several areas related to its powers and responsibilities.

Progress and Challenges

The report noted that Palau has made significant progress in recent years, but still faces challenges in implementing effective AML/CFT measures. The country is now required to implement the recommendations outlined in the report and demonstrate progress in future evaluations.

Conclusion

Overall, while Palau’s ratings were mixed, the report provides a roadmap for the country to strengthen its AML/CFT framework and improve its reputation as a reliable financial hub in the region.