The United States of America has exerted pressure on four countries in the Pacific to strengthen their money laundering legislations by putting them on the "Countries of Concern" watchlist of its Bureau of International Narcotics and Law Enforcement Affairs.
The BINL advises the US President, Secretary of State and the department of state on the development of policies and programmes to combat international narcotics and crime.
In its 24th International Narcotics Control Strategy Report for 2007 (2007 INCSR) released last month, BINL has put Cook Islands, Samoa, Palau and Vanuatu on its "Countries of Concern" category, one that groups countries which the bureau believes carry a number of serious systemic weaknesses that could foster and facilitate international money laundering, drug trafficking and terrorist financing, thus endangering the lives of American citizens.
Every year, US officials from agencies with anti-money laundering responsibilities meet to assess money laundering situations in 200 jurisdictions.
The review includes an assessment of the significance of financial transactions in the country’s financial institutions that involves proceeds of serious crime, steps taken to address financial crime and money laundering, each jurisdiction’s vulnerability to money laundering, conformance of its laws and policies to international standards, effectiveness with which governments have acted and their political will to take the needed actions.
The 200 countries are then further grouped under three categories: Jurisdiction of Primary Concern, Jurisdiction of Concern and Other Jurisdiction Monitored.
Under the bureau’s reporting requirements, countries that fall under the Primary Concern category—many of them are bigger—are considered "major money laundering countries", a label that infers less of the robustness of a country’s anti-money-laundering laws than the transaction through its financial systems of significant amounts of proceeds from all serious crimes, some of which may include international drug trafficking.
They are monitored differently and no Pacific Islands country is listed under this category, although Nauru was classified "Primary Concern" in 2000 and 2001, when it was a known tax haven.
But for the four PICs under the "Concern" category, recommendations in the report sees pressure being put on them to tie up loose ends and contribute to efforts to address international money laundering.
"The Cook Islands should continue to implement legislation designed to strengthen its nascent anti-money laundering and counter terrorist financing institutions. "It should maintain vigilant regulation of its offshore financial sector, including its asset protection trusts, to ensure its offshore sector comports with international standards," the report urges.
VIGILANT REGULATION
The tiny island of Palau was advised to criminalise the financing of terrorism and begin a broad-based implementation of legal reforms already in place.
Samoa, seen by the bureau as having major deficiencies in the legal and regulatory systems as well as "what appears to be a lack of political will throughout the system", was told to "take the necessary steps to establish a regime that comports with all international standards, to which it (the government) has committed to adhere to by virtue of its membership of the Asia/Pacific Group on Money Laundering.
The bureau concludes that Samoa’s anti-money laundering and/counter terrorist regime was not functioning.
In Vanuatu, "some deficiencies remain" although it was noted that the country has made some progress in criminalising terrorist financing and combating money laundering.
"The government of Vanuatu has not taken a risk-based approach to combating money laundering and terrorist financing; a person who commits a predicate offence for money laundering can not also be charged with money laundering; and the current law does not require names and addresses of directors and shareholders to be provided upon registration of an IBC (international business company).
"Vanuatu should immobilise bearer shares and require complete identification of the beneficial ownership of IBCs.
"It should implement all the provisions of its Proceeds of Crime Act and enact additional legislation necessary to bring both its onshore and offshore financial sectors into compliance with international standards."
Nine other Pacific islands are also not without faults, although with shortcomings that are considered less grave.
East Timor, Fiji, Marshall Islands, Federated States of Micronesia, Nauru, Niue, Papua New Guinea, Solomon Islands and Tonga are categorised as "Countries Monitored".
This means that while they "do not pose an immediate concern, it will nevertheless be important to monitor their money laundering situations because under certain circumstances, virtually any jurisdiction of any size can develop into a significant money laundering centre".
The United States’ effort to combat international drug trafficking and money laundering has become ever more intense after observation that there is increasing inter-relationship between inadequate money laundering legislation and terrorist financing.
The bureau contributed US$1.5 million last year to the Pacific Islands Forum Secretariat (PIFS) to fund the first year of its Pacific Anti-Money Laundering Programme (PALP).
PALP, set up in September last year, is a four-year programme designed to help the Forum’s member states with their national anti-money laundering and counter-terrorism regimes to comply with international standards and relevant United Nations conventions and UN Security Council resolutions.
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