Cook Islands Financial Crime Investigation Techniques Under Scrutiny Amid Money Laundering Concerns

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Washington D.C., July 2000 - A Warning Issued by the US Treasury Department

The United States Department of the Treasury has issued a warning to banks and financial institutions operating in the country to exercise heightened vigilance when dealing with transactions involving the Cook Islands, an internally self-governing nation in free association with New Zealand.

Concerns Over Effective Counter-Money Laundering Measures

The Cook Islands, which has been developing an offshore financial services sector, has been criticized for its lack of effective counter-money laundering measures. The country’s legal, supervisory, and regulatory systems have been identified as having significant shortcomings that create opportunities for money laundering and the protection of criminal proceeds.

FATF Classification: Non-Cooperative in the Fight Against Money Laundering

According to the Financial Action Task Force on Money Laundering (FATF), the Cook Islands is considered non-cooperative in the fight against money laundering due to its failure to implement adequate measures to prevent and detect money laundering. The country’s lack of transparency, secrecy provisions, and absence of supervisory or enforcement mechanisms aimed at preventing and detecting money laundering have increased concerns that transactions involving Cook Islands offshore entities and accounts may be used for illegal purposes.

Advisory Issued by the Treasury Department

The Treasury Department has advised financial institutions operating in the United States to give enhanced scrutiny to all financial transactions originating in or routed to or through the Cook Islands, or involving entities organized or domiciled, or persons maintaining accounts, in the Cook Islands. Financial institutions subject to suspicious transaction reporting rules are required to carefully examine the available facts relating to such transactions to determine if they require reporting.

No Curtailment of Legitimate Business

The issuance of this advisory does not mean that U.S. financial institutions should curtail legitimate business with the Cook Islands. However, it is emphasized that financial institutions must exercise heightened vigilance and due diligence when dealing with transactions involving the Cook Islands to prevent money laundering and other financial crimes.

Technical Assistance Offered by US Officials

U.S. officials have offered technical assistance to the Cook Islands authorities as they work to remedy the deficiencies in their counter-money laundering systems. The Treasury Department has also indicated that it will consider any report relating to a transaction described in this advisory as a report of a suspicious transaction relevant to a possible violation of law or regulation, for purposes of the prohibitions against disclosure and protection from liability for reporting of suspicious transactions.

Legislative Changes Proposed

The Cook Islands is considering legislative changes to remedy some of its deficiencies and has also proposed the establishment of a domestic financial intelligence unit for counter-money laundering purposes. However, until these measures are implemented, financial institutions operating in the United States must remain vigilant and take steps to prevent money laundering and other financial crimes.

Conclusion

Financial institutions operating in the United States must exercise heightened vigilance when dealing with transactions involving the Cook Islands to prevent money laundering and other financial crimes. The Treasury Department’s advisory serves as a reminder of the importance of effective counter-money laundering measures and the need for international cooperation in the fight against financial crime.