Vanuatu Fails to Meet FATF Recommendations on AML/CTF Requirements
Overview
The Vanuatu Financial Intelligence Unit (VFIU) has been found lacking in its efforts to regulate and supervise designated non-financial businesses and professions (DNFBPs) under the Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) Act.
Market Entry Requirements Strengthened
According to a recent report, Vanuatu has strengthened its market entry requirements with amendments to the Casino Control Act, AML/CFT Act, and TCSP Act. However, the VFIU has not conducted adequate AML/CFT onsite monitoring and supervision of casinos and most other categories of DNFBP.
Weaknesses Identified
The report also notes that there is no power under the AML/CFT Act to disqualify beneficial owners or controllers, despite the existence of powers to remove directors, managers, and secretaries who are disqualified persons. Furthermore, there is a lack of requirements to check criminal records with foreign jurisdictions where appropriate.
Risk-Based Approach Limited
Vanuatu has also been criticized for its risk-based approach to AML/CFT supervision, which is limited by a lack of data and information on the ML/TF risks faced by reporting entities.
Conclusion
While Vanuatu has made some progress in strengthening its market entry requirements, it still falls short of meeting FATF recommendations. The VFIU needs to take concrete steps to improve its supervision and monitoring of DNFBPs, including conducting regular onsite inspections and ensuring that all reporting entities are subject to adequate AML/CFT controls.
Rating: Low Compliance
The report assigns a low rating to Vanuatu’s compliance with Recommendation 28 on Regulation and Supervision of DNFBPs. The VFIU needs to take immediate action to address the identified weaknesses in order to improve its overall level of compliance with FATF recommendations.
Recommendations for Improvement
- Conduct regular onsite inspections of casinos and other categories of DNFBP to ensure compliance with AML/CFT requirements.
- Develop a risk-based approach to supervision that takes into account the ML/TF risks faced by each reporting entity.
- Improve data collection and analysis to better understand the ML/TF risks in Vanuatu.
- Establish powers to disqualify beneficial owners or controllers who are deemed to be high-risk individuals.
Conclusion
By implementing these recommendations, Vanuatu can improve its level of compliance with FATF recommendations and reduce the risk of money laundering and terrorist financing in the country.