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Financial Institution Risk Assessments in Solomon Islands: A Mixed Bag of Compliance

A recent evaluation by the Financial Action Task Force (FATF) has revealed a mixed picture of compliance with anti-money laundering and combating the financing of terrorism (AML/CFT) standards in Solomon Islands. While some areas show significant progress, others require improvement.

Strengths

The assessment highlights several strengths, including:

• The country’s efforts to assess risk and apply a risk-based approach
• Its cooperation with international partners on financial intelligence sharing
• Progress in implementing targeted financial sanctions related to terrorism and proliferation

Areas for Improvement

However, the evaluation also identifies areas that require improvement, including:

• Laws and regulations regarding money laundering offenses, confiscation, and provisional measures are not fully compliant with international standards
• The regime for non-profit organizations is not yet fully transparent
• Financial institutions have gaps in internal controls and foreign branch and subsidiary supervision

Challenges

The country’s reliance on third parties to provide financial services also poses risks, including:

• Limited powers of supervisors and law enforcement authorities
• Laws and regulations regarding cash couriers and statistics are not yet fully compliant
• Reporting of suspicious transactions is not yet fully effective

Progress and Commitment

Despite these challenges, the FATF evaluation recognizes that Solomon Islands has made significant progress in recent years and remains committed to improving its AML/CFT regime. The country is working to address the identified gaps and strengthen its financial sector resilience.

Conclusion

Overall, while there are areas for improvement, the assessment suggests that Solomon Islands is moving in the right direction towards full compliance with international AML/CFT standards.