Financial Crime World

Vanuatu Strengthens Fight Against Terror Financing with New Sanctions Regime

The Government of Vanuatu has taken a significant step in strengthening its efforts to combat terrorist financing by implementing new sanctions regulations under the United Nations Financial Sanctions Act (UNFSA).

Introduction of Measures to Prevent Misuse of Property and Financial Services

According to officials, the new regime introduces a range of measures aimed at preventing the misuse of property and financial services by designated individuals and entities. These measures include:

  • Imprisonment penalties of up to 25 years
  • Fines for those who deal with frozen assets or provide financial services to sanctioned individuals and entities

Establishment of Sanctions Secretariat

The sanctions regime also establishes a Sanctions Secretariat, responsible for coordinating and implementing domestic actions to combat terrorist financing. The Secretariat will:

  • Maintain a consolidated list of designated persons and entities
  • Request information from reporting entities
  • Conduct onsite inspections

Guidelines and Notices Issued by VFIU

In addition, the Vanuatu Financial Intelligence Unit (VFIU) has issued guidelines and notices informing reporting entities of their obligations under the new regime. The unit has also conducted offsite supervision to ensure that internal controls are in place to screen for and freeze designated property.

Addressing Deficiencies Identified in 2015 Mutual Evaluation Report

The new sanctions regime addresses deficiencies identified in Vanuatu’s 2015 Mutual Evaluation Report (MER), which highlighted a lack of coverage in the National Risk Assessment (NRA) of terrorist financing and non-profit organizations. The report also noted:

  • Absence of requirements for charitable associations to register and submit annual financial statements
  • Inadequate record-keeping and monitoring compliance

FATF Re-Rating

The Financial Action Task Force (FATF) has since re-rated Vanuatu’s recommendation 8 from “Not Compliant” to “Largely Compliant”, citing improvements in the country’s anti-money laundering and combating the financing of terrorism (AML/CFT) regime.

Commitment to Strengthening AML/CFT Framework

The Government of Vanuatu has committed to continuing to strengthen its AML/CFT framework, with a focus on:

  • Improving customer due diligence
  • Monitoring compliance
  • Targeted outreach to high-risk sectors such as non-profit organizations

Quote from Government Official

“The implementation of this new sanctions regime demonstrates our commitment to combating terrorist financing and protecting the integrity of our financial system,” said a government official. “We will continue to work closely with international partners to ensure that our efforts are effective and efficient in preventing the misuse of our financial system for illicit purposes.”