Financial Crime World

Samoan Financial Sector Lacks Teeth in Fight Against Money Laundering and Terrorist Financing

A recent report by the Asia-Pacific Group on Money Laundering (APG) has highlighted several shortcomings in Samoa’s anti-money laundering (AML) and counter-terrorism financing (CFT) regime, leaving the country vulnerable to financial crimes.

Shortcomings Identified

  • The private sector was engaged in undertaking National Risk Assessments (NRAs), but only provided general feedback without providing specific findings on-site to financial institutions or designated non-financial businesses and professions.
  • Samoa has failed to implement a comprehensive, risk-based approach to allocating resources and implementing measures to prevent or mitigate money laundering and terrorist financing.
  • Trustee companies providing offshore financial services in Samoa may be exempted from certain obligations under the Money Laundering Prevention Act 2007, despite the high-risk nature of this sector.

Legislative Shortcomings

  • The country lacks legislation to support targeted financial sanctions related to terrorism and weapons proliferation financing.
  • Several acts need to be amended to address technical deficiencies:
    • International Companies Act 1988
    • Trusts Act 2014
    • Companies Act 2001
    • MLP Act 2007
    • MLP Regulations 2009

Action Required

To address these shortcomings, Samoa has been tasked with:

  • Implementing a comprehensive, risk-based approach to AML/CFT compliance
  • Providing feedback on findings from NRAs to financial institutions and designated non-financial businesses and professions
  • Ensuring that trustee companies providing offshore financial services are only exempted from obligations under the MLP Act 2007 if they have proven a low-risk profile

Action Items

  1. Conduct in-depth NRAs: Consider types or volume of threats associated with predicate offenses.
  2. Provide feedback on NRA findings: To financial institutions and designated non-financial businesses and professions.
  3. Implement comprehensive, risk-based approach: To allocating resources and implementing measures to prevent or mitigate money laundering and terrorist financing.
  4. Ensure trustee company exemptions: Only if they have proven a low-risk profile.
  5. Undertake additional customer due diligence: For categories of customers, business relationships, or transactions with a higher risk of money laundering.
  6. Expand monitoring of AML/CFT compliance: To requirements on financial institutions and designated non-financial businesses and professions to assess risk and implement measures for risk mitigation.
  7. Only allow simplified measures: If lower risks have been identified and in the absence of any suspicion of money laundering or terrorist financing.

Samoa’s authorities will commence a process to document legislative improvements required and pursue a process of legislative reform. The country needs to amend its legislation to:

  • Support targeted financial sanctions related to terrorism and weapons proliferation financing
  • Address technical deficiencies in existing laws