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Palau’s Financial Institution Risk Management Policies Under Scrutiny

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A recent evaluation by international financial authorities has revealed that Palau’s financial institution risk management policies are in need of improvement. The assessment, which examined 40 key areas of risk management, found that the country falls short in several critical areas.

Assessment Highlights

The report evaluated Palau’s compliance in various areas, including:

• Partially compliant:
  • Assessing risk and applying a risk-based approach (R.1)
  • Regulating and supervising financial institutions (R.26)
• Non-compliant:
  • Financial institution secrecy laws (R.9)
  • Transparency and beneficial ownership of legal arrangements (R.25)

Areas of Improvement

Palau was found to be partially compliant in areas such as:

• Correspondent banking (R.13)
• Money or value transfer services (R.14)
• New technologies (R.15)
• Wire transfers (R.16)
• Reliance on third parties (R.17)
• Internal controls and foreign branches and subsidiaries (R.18)
• Higher-risk countries (R.19)

Additionally, Palau’s financial authorities were found to be lacking in areas such as:

• Regulation and supervision of DNFBPs (R.28)
• Transparency and beneficial ownership of legal persons (R.24)

Non-compliant Areas

The evaluation highlighted several areas where Palau is non-compliant, including:

• Reporting of suspicious transactions (R.20)
• Tipping-off and confidentiality (R.21)
• Powers of supervisors (R.27)

Conclusion

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While Palau has made progress in certain areas, it is clear that there is still much work to be done to bring its financial institution risk management policies up to international standards. The country must take concrete steps to address these shortcomings in order to ensure the stability and integrity of its financial system.