Samoa’s Offshore Sector Raises Concerns over Money Laundering and Terrorist Financing
A Leading Financial Watchdog Identifies Risks
A recent report by a leading financial watchdog has highlighted concerns over Samoa’s offshore sector, citing risks associated with money laundering (ML) and terrorist financing (TF). The report assessed the country’s anti-money laundering and counter-terrorist financing measures, identifying several areas of concern.
High-Risk Areas Identified
The international banking and finance sector in Samoa is considered a high-risk area due to the presence of:
- International Business Companies (IBCs)
- Money transfer operators (MTOs)
- Cross-border movement of cash
These entities are vulnerable to misuse for ML and TF, and there have been several foreign requests for information related to Samoan IBCs that indicate possible misuse.
Assessing the Risk of Terrorism and Terrorist Financing
Despite concerns, authorities in Samoa assess the risk of terrorism and TF as low. This is supported by previous reports and on-site interviews. However, experts believe that this may be due to a lack of detection rather than an actual low level of criminal activity.
Importance of the Domestic Banking Sector
The report highlights the importance of the domestic banking sector in Samoa, citing its materiality in the country’s economy. While there have been some measures taken recently to address the risks associated with the offshore sector, more needs to be done to improve the overall effectiveness of anti-money laundering and counter-terrorist financing measures.
Compliance Deficiencies
One area of concern is the level of compliance by financial institutions and designated non-financial businesses and professions (DNFBPs) in Samoa. While there has been an improvement in technical compliance since 2006, some important deficiencies remain, including:
- Criminalization and prevention of ML, TF, and proliferation financing
- Use of financial intelligence and other information for ML investigations
- Effectiveness in relation to confiscation of criminal proceeds
- Measures to address proliferation financing
Recommendations for Improvement
To address the risks associated with its offshore sector, Samoa should:
- Improve technical compliance by financial institutions and DNFBPs
- Enhance the use of financial intelligence and other information for ML investigations
- Increase effectiveness in relation to confiscation of criminal proceeds
- Implement measures to address proliferation financing
- Strengthen anti-money laundering and counter-terrorist financing measures
Overall, while Samoa has made some progress in improving its anti-money laundering and counter-terrorist financing measures, more needs to be done to address the risks associated with its offshore sector.