Financial Crime World

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Samoa’s Financial Institutions Urged to Strengthen Risk Management Systems

Apia, Samoa - The Samoan government has been urged to strengthen its risk management systems in the financial sector to prevent money laundering and terrorist financing. A report by a reputable international organization highlights several shortcomings in the country’s anti-money laundering (AML) and combating the financing of terrorism (CFT) regime.

Shortcomings in Risk Management Systems

  • Financial institutions are not required to detect and monitor complex or unusual transactions, nor do they have to give special attention to business relationships and transactions with clients from countries that do not fully comply with the FATF Recommendations.
  • There is a lack of robust internal controls, compliance, and audit measures in place to ensure that financial institutions are effectively implementing AML/CFT requirements.

Concerns about Financial Institutions

  • While some financial institutions have policies and procedures in place, others do not, leaving them vulnerable to money laundering and terrorist financing risks.
  • There is no obligation on financial institutions to make suspicious transaction reports (STRs) for transactions suspected to be related to terrorist financing.
  • The STR obligation does not apply to attempted transactions or transactions involving tax matters.

Government Response

The Samoan government has introduced the Money Laundering Prevention Act Amendment Bill 2003, which aims to strengthen AML/CFT regulations. The bill will:

  • Provide financial institutions with clear guidelines on how to identify and manage politically exposed persons (PEPs).
  • Require financial institutions to have policies and procedures in place to manage business relationships with PEPs.

Need for Better Resource Allocation

The Financial Intelligence Unit (FIU) is responsible for monitoring and supervising compliance by financial institutions with AML/CFT requirements. However, its current resources are insufficient to conduct regular onsite supervision of all financial institutions. Therefore, the FIU needs:

  • More qualified staff to effectively carry out its responsibilities.

Conclusion

While Samoa has made progress in implementing the FATF Recommendations, there are still significant gaps in its risk management systems that need to be addressed. Strengthening internal controls, improving resource allocation, and enhancing supervisory powers will be essential to preventing money laundering and terrorist financing in the country’s financial sector.