Samoan Financial Sector Lacking in Anti-Money Laundering Efforts, Experts Warn

A recent assessment by international financial watchdogs has revealed that Samoa’s private sector is not providing adequate feedback on findings related to money laundering and terrorist financing (ML/TF) prevention. The assessment also found that the country’s risk-based approach to preventing ML/TF is incomplete.

Inadequate Feedback from Private Sector

According to the report, although private sector entities were involved in conducting National Risk Assessments (NRAs), they only provided general feedback without sharing specific findings with financial institutions (FIs) and designated non-financial businesses and professions (DNFBPs).

Insufficient Risk-Based Approach

The assessment also highlighted that Samoa has not implemented a comprehensive risk-based approach to allocating resources and implementing measures to prevent or mitigate ML/TF. This means that FIs and DNFBPs are not adequately assessing risks and implementing measures to mitigate them.

Concerns about Offshore Financial Services

Furthermore, the report noted that trustee companies providing offshore financial services in Samoa may be exempted from certain obligations under the Money Laundering and Prevention of Financing of Terrorism Act 2007 without a proven low risk assessment. This has raised concerns about potential money laundering activities in the country.

Expert Concerns

Experts have also pointed out that there is no explicit obligation for FIs to understand risks, document their risk assessments, or proactively provide risk assessment information to competent authorities. Additionally, some requirements under the Financial Action Task Force (FATF) standards are not fully met, including those related to customer due diligence and monitoring of anti-money laundering and combating the financing of terrorism (AML/CFT) compliance.

Recommendations

In response to these findings, Samoan authorities have been tasked with implementing a comprehensive risk-based approach to preventing ML/TF, providing feedback on NRA findings to FIs and DNFBPs, and ensuring that trustee companies are only exempted from obligations based on a proven low risk assessment.

The report also recommended strengthening the country’s legal framework to improve its AML/CFT system. Specifically, Samoa lacks legislation to support targeted financial sanctions related to terrorism and weapons proliferation financing, and technical deficiencies need to be addressed in various laws.

Next Steps

To address these issues, Samoan authorities will commence a process to document legislative improvements required and pursue a process of legislative reform.