KOROR (Palau Horizon) — A number of international fund transfers involving Palau have been declined due to the country’s failure to comply with international banking standards, according to President Tommy Remengesau.
He said that although various sectors from the international community have lauded Palau’s commitment to improve its banking industry and to fight money laundering, there is a growing concern among the international community that “Palau is not progressing as quickly as needed.”
Several agencies have declined international fund transfers until Palau can demonstrate compliance with the Basel Core Principles of Banking Supervisions, Remengesau said.
The denials have an adverse effect on Palau’s economy, he said.
“We now have evidence that the economy is suffering as a result of the failure to implement effective banking regulations in a more timely manner. Recent denials of fund transfers have resulted in the loss of several bookings by foreign tourists through local dive shops with associated loss in revenue to local businesses,” he added.
“It is evident that Palau cannot wait…for banking regulations to be implemented,” he said.
According to Remengesau, he is seeking immunity and legal protection for members of the Financial Institution Commission which is tasked to implement and supervise bank regulations.
The lack of immunity and other statutory protections “pose a barrier to their consideration of pending bank license applicants and implementing effective regulations,” Remengesau said.
The original draft of the Financial Institution Act of 2001 provided for protections but this provision was later deleted.
Remengesau said his proposed amendments would provide immunity for the members of the commission, its staff and agents, as well as members of the Financial Intelligence Unit which was established by the Money Laundering Act of 2001.
