Vanuatu’s Fight Against Financial Crime and Terrorism Funding: A Mixed Bag of Compliance

Vanuatu, a small island nation in the Pacific, has made some progress in combating financial crime and terrorism funding, according to a recent assessment by the Financial Action Task Force (FATF). However, the country still faces significant challenges in implementing key measures to prevent and detect illicit activities.

Partial Compliance with International Recommendations

The FATF Mutual Evaluation Report 2015 revealed that Vanuatu has shown partial compliance with several of the international organization’s recommendations aimed at preventing money laundering and terrorist financing. The country has made progress in enacting laws to criminalize money laundering and terrorist financing, as well as implementing measures to confiscate assets related to these crimes.

Areas for Improvement

However, the report also highlights areas where Vanuatu falls short:

• Financial Institution Secrecy Laws: Vanuatu’s financial institution secrecy laws have been deemed largely compliant with international standards, which has raised concerns about the lack of transparency in the financial sector.
• Customer Due Diligence Requirements and Record-Keeping Practices: Vanuatu’s customer due diligence requirements and record-keeping practices have been criticized as insufficient.
• Correspondent Banking: Vanuatu has not yet implemented effective measures to prevent the use of correspondent banking for money laundering or terrorist financing.
• Beneficial Ownership Transparency: The country’s reliance on third-party providers and lack of transparency in beneficial ownership of legal persons and arrangements are major concerns.

Positive Developments

On a more positive note, Vanuatu has shown progress in:

• Regulating and Supervising Financial Institutions: The country has implemented measures to regulate and supervise financial institutions.
• Financial Intelligence Unit: Vanuatu has demonstrated a commitment to regulating its financial intelligence unit.
• International Cooperation: The country has also demonstrated a commitment to international cooperation, including mutual legal assistance and extradition agreements with other countries.

Conclusion

While Vanuatu has made some strides in combating financial crime and terrorism funding, the country still faces significant challenges in implementing key measures to prevent and detect illicit activities. To address these concerns, Vanuatu must prioritize:

• Improving its financial institution secrecy laws
• Strengthening customer due diligence requirements and record-keeping practices
• Implementing effective measures to prevent correspondent banking for money laundering or terrorist financing
• Increasing transparency in beneficial ownership of legal persons and arrangements

The country’s commitment to international cooperation is also crucial in efforts to combat global threats such as money laundering and terrorist financing.