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Combating Financial Terrorism in Marshall Islands: Authorities Take Steps to Strengthen Anti-Money Laundering Framework
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The Republic of the Marshall Islands is taking concrete steps to strengthen its anti-money laundering and combating the financing of terrorism (AML/CFT) framework, aiming to combat financial terrorism and maintain correspondent banking relationships.
Background
The Bank of the Marshall Islands, a domestic financial institution with five branches throughout the country, including on the Kwajalein Atoll, provides banking services to a substantial portion of the population. The Trust Company of the Marshall Islands also offers offshore corporate and maritime registry services. However, weaknesses in the implementation of the AML/CFT framework have contributed to correspondent banking relationship pressures.
Consequences of Inaction
The termination of the Bank of the Marshall Islands’ correspondent banking relationship (CBR) with First Hawaiian Bank would have significant negative economic repercussions without alternative arrangements. Therefore, additional steps must be taken to further lower the risk of losing the last US dollar CBR.
Action Plan
To address the identified risks, an action plan should be developed once a national risk assessment is completed. The authorities must:
- Enhance customer due diligence and ongoing monitoring requirements for financial institutions
- Continue to improve their supervisory capabilities
- Ensure that all financial institutions comply with international standards
Importance of Demonstration of Commitment
It is essential that the Marshall Islands continues to demonstrate its commitment to combating financial terrorism and maintaining correspondent banking relationships. The country’s economy and reputation are at stake, and any failure to address these issues could have far-reaching consequences.
By taking concrete steps to strengthen its AML/CFT framework, the Marshall Islands can maintain its correspondent banking relationships and ensure a stable financial system for its citizens.