Financial Crime World

Solomon Islands’ Struggle Against Financial Crime: Case Studies on Successful Initiatives

The Solomon Islands, a Pacific nation of 686,884 people, has long been vulnerable to financial crimes such as money laundering and terrorist financing. In recent years, the country’s anti-money laundering (AML) and counter-terrorist financing (CFT) measures have faced significant challenges. However, in a bid to strengthen its AML/CFT regime, the Solomon Islands government has initiated several successful initiatives that serve as a model for other countries in the region.

In response to a scathing report by the Asia-Pacific Group on Money Laundering (APG), which highlighted the country’s lack of a legal framework for implementing the Financial Action Task Force’s (FATF) Recommendations, the Solomon Islands government enacted the Anti-Money Laundering and Counter-Terrorist Financing Act in 2020. The law provides a robust framework for AML/CFT compliance, requiring financial institutions to:

  • Conduct customer due diligence
  • Report suspicious transactions
  • Maintain records of client information

Case Study 2: Strengthening Customer Due Diligence

The Solomon Islands’ banking sector has taken significant steps to enhance customer due diligence (CDD), including the introduction of risk-based approaches to identify and assess customers. Local banks have implemented enhanced CDD measures, such as:

  • Verifying customer identities
  • Monitoring transactions for suspicious activity
  • Reporting unusual transactions to regulatory authorities

Case Study 3: Regulating the Non-Profit Sector

In recognition of the high-risk nature of the non-profit sector for money laundering and terrorist financing, the Solomon Islands government has taken steps to regulate this area. Non-profit organizations (NPOs) are now required to:

  • Register with relevant authorities
  • Provide detailed financial information
  • Undergo regular audits

Case Study 4: Enhancing Supervision and Monitoring

To improve supervision and monitoring of financial institutions and designated non-financial businesses and professions (DNFBPs), the Solomon Islands government has strengthened its regulatory framework. Financial regulators now conduct:

  • Regular on-site inspections
  • Reviews of financial institution reports
  • Investigations into suspicious transactions

Case Study 5: Implementing Risk-Based Measures

The Solomon Islands’ financial sector has implemented risk-based measures to prevent money laundering and terrorist financing, including:

  • Identifying high-risk customers
  • Applying enhanced CDD measures
  • Implementing controls to detect and report suspicious transactions

These case studies demonstrate the effectiveness of targeted initiatives in strengthening AML/CFT measures in the Solomon Islands. As the country continues to build on these successes, it serves as a model for other nations in the Pacific region to follow suit.