Financial Crime World

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Vanuatu’s Legislative Framework Falls Short in Combating Terrorist Financing

A recent report highlights significant shortcomings in Vanuatu’s legislative framework for combating terrorist financing (TF). While the country has made efforts to increase its technical compliance with international standards, gaps remain in key areas.

Gaps in Key Areas

The report notes that Vanuatu’s TF laws and regulations are not aligned with the Financial Action Task Force (FATF) recommendations. Specifically:

  • The country lacks a comprehensive national strategy for combating TF.
  • Its risk-based approach is insufficient.
  • The legal framework does not provide adequate powers to investigate and prosecute TF offenses.

High-Risk Sectors

The report highlights several high-risk sectors in Vanuatu, including:

  • International banks and companies
  • Remittance services
  • Trust and company service providers
  • Currency exchange businesses
  • Casinos
  • Interactive gaming businesses

However, it notes that there is no specific focus on TF risks and vulnerabilities in the draft national risk assessment (NRA).

Challenges to Effective Implementation

The report identifies several challenges to effective implementation of Vanuatu’s AML/CFT system, including:

  • Political instability, which has hindered high-level political commitment to establish an efficient and effective AML/CFT system.
  • Insufficient financial and human resources allocated to support the development of technical expertise and capacity building in law enforcement and regulatory authorities.
  • Lack of an overarching national AML/CFT strategy, dedicated risk-based policies, and coordination mechanisms.

Recommendations

The report provides several recommendations for Vanuatu to improve its legislative framework and implementation of AML/CFT measures, including:

  • Strengthening the TF legal framework by introducing a comprehensive TF law that aligns with international standards.
  • Enhancing MLA processes by establishing a dedicated MLA unit and streamlining procedures.
  • Implementing a risk-based approach to AML/CFT supervision and regulation.
  • Providing adequate financial and human resources to support the development of technical expertise and capacity building in law enforcement and regulatory authorities.
  • Developing an overarching national AML/CFT strategy, including dedicated policies and coordination mechanisms.

Conclusion

Vanuatu’s legislative framework for combating TF remains inadequate, with significant gaps in key areas. To effectively combat TF, the country must address these shortcomings and implement effective AML/CFT measures. The report’s recommendations provide a roadmap for Vanuatu to improve its AML/CFT system and meet international standards.