Title: Vanuatu’s AML/CFT System Lags Behind FATF Standards: Key Concerns and Deficiencies

Introduction

The Asia/Pacific Group on Money Laundering (APG) has identified serious deficiencies in Vanuatu’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT) system. In response, APG issued a public statement that remains in effect until these issues are addressed.

Background: New Legislation and Deficiencies

• In 2015, Vanuatu adopted new AML/CTF Act and regulations to address money laundering and terrorist financing concerns. (Section I)
• However, these amendments did not adequately address deficiencies related to customer due diligence (CDD) and criminalization of money laundering and terrorist financing. (Section II)

Critical Technical Compliance Deficiencies

The APG has identified several major issues in Vanuatu’s AML/CFT system, including:

1. Inadequate criminalization of money laundering and terrorist financing

Vanuatu’s legal framework lacks sufficient measures to effectively penalize money laundering and terrorist financing activities. (Section III.A)

2. Inadequate measures to implement UN resolutions for targeted financial sanctions against terrorists

Vanuatu has not taken sufficient steps to adopt and enforce United Nations resolutions related to targeted financial sanctions against terrorists. (Section III.B)

3. Inadequate customer due diligence (CDD)

The current CDD measures in place do not meet international standards, potentially allowing for the facilitation of money laundering and terrorist financing activities. (Section III.C)

4. Inadequate supervisory frameworks for financial institutions and designated non-financial businesses and professions

Vanuatu’s regulatory framework fails to provide adequate supervision over financial institutions and designated non-financial businesses and professions, increasing the risk of money laundering and terrorist financing activities. (Section III.D)

APG’s Call for Action

The APG calls on Vanuatu to address these deficiencies and enhance its system’s effectiveness in combating money laundering and terrorist financing. The public statement will remain in place until the most significant deficiencies are adequately addressed, as determined by the APG membership informed by its peer monitoring and follow-up process.

FATF Scrutiny and Amended Public Statement

The FATF’s International Cooperation Review Group is now scrutinizing Vanuatu due to these severe deficiencies and their lengthy existence. The amended public statement can be found on the APG website. (Section IV)

Sections

1. Adoption of new AML/CTF Act and regulations in 2015
   • Introduction of new legislation to address money laundering and terrorist financing concerns
2. Deficiencies related to CDD and criminalization
   • Inadequate amendments to existing legislation
3. APG’s critical technical compliance deficiencies
   • Detailed analysis of each major issue
4. APG’s call for action and FATF scrutiny
   • Importance of addressing these issues to maintain international standards