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Project Summary

Strengthening AML/CFT in the Pacific Islands

Country		Kiribati,  Fiji,  Vanuatu,  Samoa [Click on the country name above to view additional information on that specific country]
Region		East Asia & Pacific
Project Sector(s)		Market Integrity and Financial Crime (Anti-Money Laundering)
Assistance Type		Technical Assistance
Start Date		January, 2002
Implementing Agencies		International Monetary Fund (IMF)
Funding Agencies		International Monetary Fund (IMF)

Project Description

Many of the members of the Pacific Islands Forum, including the Cook Islands/NZ, Fiji, Kiribati, Nauru, Niue, Vanuatu, and Samoa, have experienced difficulties in establishing a comprehensive legal, supervisory, and operational framework to ensure that financial sector fraud and money laundering do not compromise the
integrity of their financial systems. Financial sector
supervisory authorities have been unable to provide financial institutions with guidance on the prevention of fraud and money laundering that are appropriate to the unique problems of the region, and, where guidance exists, to effectively supervise the implementation of that guidance. Supervisors have also had inadequate means to verify identities and backgrounds of applicants
for banking and other licenses. In addition, financial
institutions have had insufficient information to undertake adequate due diligence checks both with respect to potential customers and to those advancing investment opportunities. Also, in many cases there is no adequate way of collecting, tracking, analyzing, and reporting suspicious transactions that might indicate fraud and money laundering, or to use such information in the prevention and prosecution of crime. Apart from a
lack of financial and human resources, these deficiencies
stem from the inadequate domestic legislation with respect to financial system fraud and money laundering.
Financial institutions and their supervisors are, therefore, in need of a new legal and institutional framework that would address these deficiencies. In particular, they need a legal, supervisory, and operational framework that would be able to: (i) provide uniform guidance to financial institutions with respect to the prevention of fraud and money laundering that is appropriate to the
region and that permits adequate cooperation among jurisdictions; and (ii) collect, analyze, and disseminate essential financial information for use of supervisors, law enforcement, and regulated entities. Such a framework must be both effective and affordable. A group of Pacific Islands Forum financial services supervisors have proposed that these problems be addressed in part through a regional approach. In particular, they proposed that the problem of inadequate financial information be
solved through the creation of a regional Financial Intelligence Unit (FIU). This proposal was endorsed by the attending heads of state and representatives at the Thirty-First Pacific Islands Forum on October 27, 2000.
The IMF's Legal Department (LEG), together with experts financed by the JSA, undertook in FY2002 to assist participating member countries of the Pacific Islands Forum in establishing the legal and institutional framework necessary to ensure that fraud and money laundering do not compromise the integrity of the financial system. This technical assistance involves:
 evaluating the conformity of existing antifraud
and anti-money laundering laws (including regulations, other rules, and supervisory guidance) with respect to:
(i) accepted international standards; and (ii) the need for an appropriate FIU, including institutional and capacity issues (e.g. political feasibility, governance, financing/budgeting, location);
 drafting anti-money laundering laws and/or amendments to existing anti-money laundering laws, and ancillary assistance with respect to anti-money laundering institutions and capacity building;
 evaluating the feasibility of establishing a regional FIU, including: (i) assessing the appropriate legal structures (e.g. uniform enabling legislation and/or bilateral or multilateral treaties), and (ii) institutional and capacity issues; and
 should a regional FIU be agreed on, drafting
enabling legal framework to create a regional
FIU, including internal governance and operational
rules.
In order to achieve these objectives, the participating member countries have agreed to establish a Coordinating Office for the Participating Countries Anti-Money Laundering Initiative (COAMLI), to be supported by the Pacific Islands Forum Secretariat and the Asia Pacific Group on Money Laundering Secretariat.

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