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Palau’s Efforts to Combat Money Laundering and Terrorism Financing Fall Short, Experts Warn

In a recent move that has raised concerns about its ability to combat financial crimes, Palau underwent its third Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) mutual evaluation. The report, released in 2018, highlights the country’s ongoing struggles to mitigate these risks.

Challenges in Addressing AML and CFT Vulnerabilities

Despite becoming a member of the Asia-Pacific Group on Money Laundering (APG) back in June 2002, Palau has only recently begun to take steps to address its AML and CFT vulnerabilities. In 2017, the country conducted its first national risk assessment, which revealed a reasonable understanding of its ML and TF risks.

Establishment of Agencies to Combat Financial Crimes

Since then, Palau has established several agencies aimed at combating financial crimes, including:

• The Financial Crime Investigations Unit in late 2016
• The Narcotics Enforcement Agency in March 2017
• The Human Trafficking Task Force in October 2017

Strengthening Legal Framework

Additionally, the country strengthened its legal framework through the issuance of the Money Laundering Act in 2014.

Ongoing Challenges and Recommendations

Despite these efforts, Palau’s AML and CFT systems remain vulnerable to exploitation by criminal organizations and terrorist groups. Experts warn that the country must continue to strengthen its laws and regulations to prevent financial crimes from taking hold.

Full Report Available for Public Review

The full report on Palau’s third APG mutual evaluation is available online for public review.