Financial Crime World

Solomons Island’s Battle Against Financial Crimes: New Tools and Strategies

Introduction

The Financial Action Task Force (FATF) has long emphasized the importance of countries implementing robust systems to prevent money laundering and terrorism financing. In response, the Solomon Islands Government has taken significant steps to strengthen its financial crime prevention infrastructure in recent years. In this article, we will explore some of the new tools and strategies the country is employing to tackle these illicit activities.

Creating a Robust Framework: The Solomon Islands Financial Intelligence Unit (SIFIU)

  • Founded in accordance with FATF’s recommendations
  • Key component of the country’s financial crime prevention efforts
  • Headed by the Unit’s Director
  • Includes a Compliance Officer and a part-time Financial Analyst
  • Has received and processed numerous Suspicious Transaction Reports (STRs) from banks since inception

Building Intelligence: Expanding the Intelligence Base

  • Banks in the Solomon Islands required to report suspicious transactions to the SIFIU
  • Numerous STRs have helped law enforcement identify potential money laundering and terrorism financing activities
  • New reporting entities include Western Union Money Transfer Service, Customs and Immigration, and Casinos (joining in 2009)

Coordinated Efforts: Committing to Targeted Action

  • Led by the Attorney-General
  • Brings together key stakeholders: Permanent Secretary of Finance, Police Commissioner, and Governor of the Central Bank of Solomon Islands (CBSI)
  • Technical Working Group composed of representatives from the Royal Solomon Islands Police, Immigration, Customs, CBSI, and SIFIU provides ongoing support and expertise

Identifying Financial Crimes: Risk Assessment to Enhance Detection and Disruption

  • Extensive risk assessment being conducted to improve detection and disruption
  • Key areas of focus: corruption, fraud, forgery and revenue evasion, environmental crime, counterfeit products and cash, sexual exploitation, and illicit drugs

Addressing Corruption

  • Participants in the risk assessment expressed concern about the extensive misuse of official funds and positions for private financial gain
  • Widespread non-compliance with financial legislation and regulations, officials acting outside their authority, and serious management, accounting, and record-keeping system breakdowns identified as major contributing factors

Tackling Fraud, Forgery, and Revenue Evasion

  • Corruption facilitates various forms of financial crime
  • Millions of dollars lost due to fraud by government employees
  • Lack of enforcement of revenue collection and recovering overpayments

Confronting Environmental Crime

  • Illegal logging causes unsustainable deforestation and generates large sums of money for laundering, contributing to corruption
  • Hundreds of millions of dollars lost in foregone forestry and fisheries revenue
  • Smuggling of Solomon Islands wildlife and dolphins for international markets and war relics has emerged as a significant problem

Countering Counterfeit Products and Cash

  • Central Bank of Solomon Islands (CBSI) has seized counterfeit SI $50 and $100 notes, as well as counterfeit US dollars
  • Suspicions that Asian logging vessels are bringing counterfeit currency into the country to finance forestry operations

Combating Sexual Exploitation

  • Trafficking of Asian women for prostitution a significant concern
  • Important clientele for this illegal activity consist of casino and nightclub patrons and employees of logging and fishing industries
  • Solomon Islands women and girls also reported to be engaging in prostitution in Honiara and forestry camps

Deterring Illicit Drugs

  • Cannabis production and sale prevalent in the Solomon Islands
  • Suspected smuggling from neighboring Papua New Guinea
  • Contributes to a range of social and community issues

Conclusion

  • The Solomon Islands continues to prioritize financial crime prevention and money laundering efforts, backed by the FATF’s 40+9 Recommendations
  • Through the establishment of the SIFIU, new financial intelligence sources, and the strengthening of key institutions, the country is making progress in addressing financial crimes.
  • The ongoing risk assessment will help direct resources and attention towards the most pressing issues, ensuring a more effective and comprehensive approach to this ongoing challenge.