Financial Crime World

Vanuatu’s Legislative Framework Lacks Consistency with International Standards

A recent assessment by an independent consultant has revealed significant shortcomings in Vanuatu’s legislative framework to combat terrorist financing (TF). While the country has made some progress in implementing anti-money laundering (AML) and combating the financing of terrorism (CFT) measures, there are still major gaps that need to be addressed.

Key Shortcomings

  • The TF laws do not adequately criminalize TF offenses.
  • There is a lack of sufficient powers for law enforcement agencies to investigate and prosecute TF cases.
  • The legal framework does not effectively prevent the use of bearer shares and bearer share warrants for domestic companies, making it difficult to track the beneficial ownership of international companies.

Insufficient Risk Assessment

  • Vanuatu lacks a comprehensive risk assessment of its AML/CFT system.
  • The draft National Risk Assessment (NRA) focuses primarily on money laundering threats, with limited attention given to TF risks and vulnerabilities.

Inadequate International Cooperation

  • Vanuatu’s ability to provide informal assistance in relation to international companies is prohibited by the International Companies Act, requiring a court order or warrant.
  • This has hindered the country’s ability to render mutual legal assistance (MLA) in a timely manner for most incoming requests.

Political Instability Undermines Commitment

  • The frequent changes in government leadership have an impact on high-level political commitment to establish and maintain an efficient and effective AML/CFT system.
  • This has resulted in inadequate financial and human resources, as well as limited support for the development of technical expertise and capacity building in law enforcement and regulatory/supervisory authorities.

Overall Level of Compliance and Effectiveness

  • While Vanuatu has increased its levels of technical compliance with FATF standards since the 2006 mutual evaluation in some areas, there are still significant gaps that need to be addressed.
  • The country’s AML/CFT system lacks an overarching national strategy, dedicated risk-based policies, and reliable statistical information.

Conclusion

In conclusion, Vanuatu’s legislative framework to combat TF is inadequate and inconsistent with international standards. The country must take immediate action to address these shortcomings to prevent the misuse of its financial system for criminal purposes.