Financial Crime World

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Samoa’s Financial System Lacks Robustness in Fighting Money Laundering, Terrorist Financing

A recent report by the Asia-Pacific Group on Money Laundering (APG) has highlighted several shortcomings in Samoa’s financial system in preventing money laundering and terrorist financing.

Shortcomings in National Risk Assessments

The report found that while the private sector was engaged in undertaking National Risk Assessments (NRAs), only general feedback was provided without specific findings being given to financial institutions or designated non-financial businesses and professions.

Lack of Specific Findings

This lack of specificity leaves financial institutions and other stakeholders without crucial information to help them mitigate risks associated with money laundering and terrorist financing.

Inadequate Allocation of Resources

The report also noted that Samoa has not implemented a comprehensive, risk-based approach to allocating resources and implementing measures to prevent or mitigate money laundering and terrorist financing based on assessed risks. This lack of a robust approach leaves the country vulnerable to these illegal activities.

Exemption for Offshore Financial Services

Furthermore, the report highlighted concerns over the exemption given to trustee companies providing offshore financial services in Samoa under certain laws administered by the Samoa International Finance Authority (SIFA). While only one limited exemption has been granted, this potentially broad exemption was not based on a proven low risk, despite the NRA suggesting that the risk in the offshore sector is high.

The report identified several deficiencies in Samoa’s legal framework, including:

  • The lack of legislation to support targeted financial sanctions relating to terrorism and weapons proliferation financing
  • Technical deficiencies in various laws, including:
    • International Companies Act 1988
    • Trusts Act 2014
    • Companies Act 2001
    • Money Laundering Prevention (MLP) Act 2007
    • MLP Regulations 2009

Recommendations for Improvement

The report concluded that Samoa’s Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) system lacks robustness and recommended several action items to strengthen the country’s financial system, including:

  • Providing feedback on findings from NRAs to financial institutions or designated non-financial businesses and professions
  • Implementing a comprehensive, risk-based approach to allocating resources and implementing measures to prevent or mitigate money laundering and terrorist financing
  • Strengthening the legal framework to support targeted financial sanctions

Government Response

The Samoan government has committed to addressing these issues and is expected to commence a process of legislative improvements. The country’s failure to adequately address these concerns raises questions about its ability to effectively combat money laundering and terrorist financing.

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