Financial Crime World

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Palau’s Due Diligence Procedures for Financial Transactions Under Scrutiny

International experts have evaluated Palau’s efforts to implement anti-money laundering and counter-terrorist financing measures, revealing both strengths and weaknesses in its due diligence procedures for financial transactions.

FATF Mutual Evaluation Report 2018 Highlights

According to the report, Palau has made significant progress in implementing certain technical requirements, but there are areas that require improvement. The report highlights several key areas where Palau has demonstrated compliance with FATF recommendations, including:

  • Laws and regulations related to money laundering and terrorist financing
  • Cooperation and coordination with international partners

However, the report also identifies gaps in Palau’s due diligence procedures, particularly in the following areas:

Customer Due Diligence

The report notes that Palau has implemented a risk-based approach to assessing money laundering risks, but its national cooperation and coordination mechanisms could be strengthened.

Record-Keeping and Reporting of Suspicious Transactions

While Palau has laws and regulations in place to criminalize money laundering and terrorist financing, there are concerns about the effectiveness of these measures and the need for greater transparency and beneficial ownership information.

Areas for Improvement

The report highlights areas where Palau needs to improve its due diligence procedures, including:

  • Reliance on third-party service providers
  • Regulation and supervision of financial institutions and designated non-financial businesses and professions (DNFBPs)
  • Powers of supervisors

Additionally, there are concerns about the lack of transparency in Palau’s financial sector and the need for greater public access to information.

Conclusion

Despite these challenges, the report concludes that Palau has made significant progress in implementing FATF recommendations and is committed to continuing to strengthen its anti-money laundering and counter-terrorist financing measures. The findings of this evaluation will inform Palau’s efforts to improve its due diligence procedures for financial transactions and enhance international cooperation on anti-money laundering and counter-terrorism initiatives.