Financial Crime World

Samoan Authorities Struggle to Mitigate Money Laundering and Terrorist Financing Risks

A recent report by the Financial Action Task Force (FATF) has highlighted significant deficiencies in Samoa’s efforts to combat money laundering (ML) and terrorist financing (TF). The report criticizes Samoa’s supervision and enforcement mechanisms, citing concerns over the country’s ability to identify and mitigate actual ML/TF risks.

Supervision and Enforcement

The report notes that Samoa’s supervision of trust and company service providers (TCSPs) is insufficient in depth and scope. Additionally, the frequency and intensity of compliance inspections of domestic financial institutions are inadequate. The country has not introduced a comprehensive, risk-based approach to supervision based on a sound understanding of ML/TF risks at institution and sector level.

Lack of Progress

The report criticizes Samoa’s lack of progress in addressing the misuse of legal persons and arrangements, including international business companies (IBCs). While TCSPs appear to understand and implement requirements to identify the ultimate beneficial owners of IBCs on creation, such information is only updated annually. The country has also failed to address proliferation financing issues.

Areas for Improvement

The report highlights several areas where Samoa needs improvement, including:

  • Strengthening controls: Prevent misuse of legal persons and arrangements
  • Improving supervision and enforcement: Enhance oversight of TCSPs and domestic financial institutions
  • Enhancing financial intelligence and ML investigations: Utilize financial information to combat ML/TF
  • Addressing proliferation financing issues: Implement measures to prevent the use of finance for malicious purposes

International Cooperation

Despite these challenges, the report notes that Samoa has demonstrated a strong willingness to provide international assistance and has made significant commitments as a party to several international agreements relating to mutual assistance.

Conclusion

The FATF report provides a comprehensive assessment of Samoa’s AML/CFT measures, highlighting both progress and deficiencies. The country is encouraged to conduct a more comprehensive assessment of its TF risks and to address the lack of ongoing due diligence by TCSPs on IBCs. While Samoa has made efforts to combat ML/TF, significant challenges remain, and urgent action is needed to improve supervision, enforcement, and AML/CFT systems.