Financial Crime World

Financial Institution Compliance Requirements in Palau Under Scrutiny

Palau’s compliance with global standards for combating money laundering and terrorist financing has been evaluated in a recent report. The evaluation highlights both the country’s strengths and weaknesses, providing insights into areas that require improvement.

Progress Made

The report commends Palau for making significant progress in implementing technical requirements to prevent financial crimes. Specifically:

  • Risk Assessment: Palau has demonstrated a strong commitment to assessing risk and applying a risk-based approach.
  • National Cooperation: The country has maintained national cooperation and coordination with other agencies.
  • Money Laundering Offence: A money laundering offence is in place, along with confiscation and provisional measures to combat the crime.
  • Terrorism Sanctions: Targeted financial sanctions related to terrorism and terrorist financing are also in place.

Areas for Improvement

However, the report highlights several areas where Palau falls short:

  • Financial Institution Secrecy Laws: The country’s financial institution secrecy laws need improvement.
  • Customer Due Diligence: Customer due diligence is not always carried out effectively.
  • Record Keeping: Record keeping and reliance on third parties require more attention.

Key Recommendations

The report emphasizes the importance of:

  • Transparency: Transparency and beneficial ownership of legal persons and arrangements are crucial.
  • Regulation and Supervision: Regulation and supervision of financial institutions and designated non-financial businesses and professions (DNFBPs) are essential.

Compliance Rating

Palau has been rated as “partially compliant” in several areas, including:

  • Assessing risk and applying a risk-based approach
  • Customer due diligence
  • Record keeping
  • Reliance on third parties

In other areas, the country has been deemed “largely compliant”, such as having a money laundering offence and confiscation measures.

Conclusion

The report concludes that Palau has made progress in implementing the technical requirements of the FATF Recommendations but needs to continue improving its compliance in certain areas to prevent financial crimes effectively.