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Sanctions:
None applicable
____________________________________________________
Offshore Jurisdiction Blacklists:
Information unavailable.
____________________________________________________
US State Department Money Laundering Report - 2011:
Palau is not a regional or offshore financial center. The primary
sources of illegal proceeds are consumer marijuana sales,
prostitution, and illegal fishing by unlicensed foreign vessels.
Corruption in the governmental sector includes the misuse of
government funds and cronyism, in part due to Palau’s small size
and extensive family networks. Palau is a low-risk jurisdiction for
organized crime and terrorist financing.
Palau has one free trade zone, the Ngardmau Free Trade Zone
(NFTZ). A public corporation, Ngardmau Free Trade Zone
Authority, oversees the development of the NFTZ and issues
licenses for businesses to operate there. NFTZ licensing exempts
businesses from Foreign Investment Act requirements and certain
import and export taxes. To date, no development has taken
place within the area designated for the free trade zone and the
NFTZ directors continue to search for developers and investors.
DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY
TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS
TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US
CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN
THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE
U.S.: NO
CRIMINALIZATION OF MONEY LAUNDERING:
“All serious crimes” approach or “list” approach to predicate
crimes: All serious crimes
Legal persons covered: criminally: YES civilly: YES
CRIMINALIZATION OF TERRORIST FINANCING:
Ability to freeze terrorist assets without delay: NO
UN lists of designated terrorists or terrorist entities distributed to
financial institutions: NO
(Please refer to the Department of State’s Country Reports on
Terrorism, which can be found here: http://www.state.
gov/s/ct/rls/crt/)
KNOW-YOUR-CUSTOMER RULES:
Covered entities: Banks, credit unions, and money remitters
Enhanced due diligence procedures for PEPs: Foreign: NO
Domestic: NO
SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:
Covered entities: Banks, credit unions, money remitters, and non-
governmental organizations
Number of STRs received and time frame: Not available
Number of CTRs received and time frame: Not available
MONEY LAUNDERING CRIMINAL
PROSECUTIONS/CONVICTIONS:
Prosecutions: Not available
Convictions: Not available
Assets forfeited: criminally: Not available civilly: Not available
RECORDS EXCHANGE MECHANISM:
With U.S.: YES
With other governments/jurisdictions: YES
Palau is a member of the Asia/Pacific Group on Money
Laundering (APG), a FATF-style regional body. Its most recent
mutual evaluation can be found here:
http://www.apgml.org/documents/docs/17/Palau%202008.pdf
ENFORCEMENT AND IMPLEMENTATION ISSUES AND
COMMENTS:
The Money Laundering Prevention and Control Act (MLPCA),
amended in 2007, addresses many of the deficiencies in the
Government of Palau’s (GOP) AML/CFT regime but does not
include all predicate crimes prescribed in the international
standards. However, the stronger measures are hampered by a
lack of human, financial, and structural capacity, along with an
absence of implementing regulations.
Significant deficiencies remain in the areas of customer due
diligence (CDD), record keeping, monitoring of transactions, and
supervision. The Financial Institutions Commission (FIC) is the
AML/CFT supervisor, but it does not have the resources to ensure
AML/CFT compliance nor to issue any regulations. The
designated non-financial businesses and professions (DNFBPs)
operating in Palau are not covered by the MLPCA.
The Palau Financial Intelligence Unit (FIU) is responsible for
receiving and analyzing SARs, along with tracing, seizing, and
freezing assets, but lacks a dedicated budget and staff. The
GOP, with assistance from the Pacific Anti-Money Laundering
Program (PALP) mentor, organized a multi-agency SAR review
team to review the reports and help identify and initiate
investigations. The multi-agency approach has enabled the FIU to
function given its limitations of manpower and funding, and has
fostered information sharing and joint investigations between the
relevant law enforcement agencies. It is not, however, a long-term
solution, and the GOP should dedicate funds and permanent staff
to the FIU.
The Cash Courier Disclosure Act has been used successfully by
Palau Customs and Security to make bulk cash currency seizures
at the airport. The GOP should extend its excellent monitoring of
the airport to all its border points of entry and exit to protect
against the smuggling of bulk cash, narcotics and other
contraband.
Palau’s Counter-Terrorism Act specifically addresses its obligation
under UN Security Council Resolution 1373. However, it does not
adequately address provisional measures of seizing of evidence
and property and the freezing of capital and financial transactions
related to the financing of terrorism. Palau should strengthen its
ability to freeze and confiscate assets related to the financing of
terrorism. The GOP should circulate the UNSCR 1267 Sanctions
Committee’s consolidated list of terrorist entities. Palau should
also become a party to the 1988 UN Drug Convention, the UN
Convention against Corruption, and the UN Convention against
Transnational Organized Crime.
____________________________________________________
US State Dept Narcotics Report 2011 (introduction):
No report available
____________________________________________________
US State Dept Trafficking in Persons Report 2011
(introduction):
(Tier 2)
Palau is a destination country for women from countries in the
Asia-Pacific region who are subjected to forced prostitution and
people from the Philippines, China, and Bangladesh who are
subjected to conditions of forced labor. The foreign population
including workers and dependents is an estimated 5,000 — more
than one-third of the county’s population of 14,000 — with the
majority from the Philippines, China, and Bangladesh. Some
reports indicate that employers recruit foreign men and women to
work in Palau through fraudulent representation of contract terms
and conditions of employment. Some foreign workers pay
thousands of dollars in recruitment fees and willingly migrate to
Palau for jobs in domestic service, agriculture, or construction but
are subsequently coerced to work in situations significantly
different than what their contracts stipulated. Excessive hours
without pay, threats of physical or financial harm, confiscation of
their travel documents, and the withholding of salary payments
are used as tools of coercion to obtain and maintain their
compelled service. Some women from China and the Philippines
migrate to Palau expecting to work as waitresses or clerks, but are
subsequently forced into prostitution in karaoke bars and
massage parlors. Non-citizens are officially excluded from the
minimum wage law, and new regulations make it extremely difficult
for foreign workers to change employers, consequently increasing
their vulnerability to involuntary servitude and debt bondage.
The Government of Palau does not fully comply with the minimum
standards for the elimination of trafficking; however, it is making
significant efforts to do so. The government has a comprehensive
anti-trafficking law, though it did not investigate or prosecute any
trafficking cases during the year, including neither of two reported
trafficking cases brought to their attention, one for the forced
labor of a Filipina domestic worker, and one for the forced
prostitution of several Filipina women recruited for waitressing. In
the past, the government worked with the local Catholic Church to
offer victim protection services, but did not assist any victims
through this mechanism during the reporting period year. The
government made some efforts to raise awareness of or prevent
trafficking during the year.
For full report click here
____________________________________________________
US State Dept Terrorism Report 2009
Palau worked closely with the United States on counterterrorism.
Local law enforcement officers from the Ministry of Justice,
Ministry of Public Infrastructure, Industries and Commerce, and
the Division of Customs continued to receive training on
counterterrorism from U.S. counterparts. In addition, the Federal
Aviation Administration and the Transportation Security
Administration regularly inspected airport facilities and trained
airport officials on security procedures.
Responding to UN Security Council Resolution 1373, the national
congress passed a Foreign Evidence Act, a Money Laundering
and Proceeds of Crime Act, a Mutual Assistance in Criminal
Matters Act, and an Extradition and Transfer Act in 2001. These
laws are intended to regulate the banking system, criminalize
money laundering, and provide a legal basis for international law
enforcement cooperation. A Financial Intelligence Unit was
established to detect money laundering and other financial crimes.
____________________________________________________
Links:
Worldwide AML Legislation (International Bar Association)
None applicable
____________________________________________________
Offshore Jurisdiction Blacklists:
Information unavailable.
____________________________________________________
US State Department Money Laundering Report - 2011:
Palau is not a regional or offshore financial center. The primary
sources of illegal proceeds are consumer marijuana sales,
prostitution, and illegal fishing by unlicensed foreign vessels.
Corruption in the governmental sector includes the misuse of
government funds and cronyism, in part due to Palau’s small size
and extensive family networks. Palau is a low-risk jurisdiction for
organized crime and terrorist financing.
Palau has one free trade zone, the Ngardmau Free Trade Zone
(NFTZ). A public corporation, Ngardmau Free Trade Zone
Authority, oversees the development of the NFTZ and issues
licenses for businesses to operate there. NFTZ licensing exempts
businesses from Foreign Investment Act requirements and certain
import and export taxes. To date, no development has taken
place within the area designated for the free trade zone and the
NFTZ directors continue to search for developers and investors.
DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY
TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS
TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US
CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN
THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE
U.S.: NO
CRIMINALIZATION OF MONEY LAUNDERING:
“All serious crimes” approach or “list” approach to predicate
crimes: All serious crimes
Legal persons covered: criminally: YES civilly: YES
CRIMINALIZATION OF TERRORIST FINANCING:
Ability to freeze terrorist assets without delay: NO
UN lists of designated terrorists or terrorist entities distributed to
financial institutions: NO
(Please refer to the Department of State’s Country Reports on
Terrorism, which can be found here: http://www.state.
gov/s/ct/rls/crt/)
KNOW-YOUR-CUSTOMER RULES:
Covered entities: Banks, credit unions, and money remitters
Enhanced due diligence procedures for PEPs: Foreign: NO
Domestic: NO
SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:
Covered entities: Banks, credit unions, money remitters, and non-
governmental organizations
Number of STRs received and time frame: Not available
Number of CTRs received and time frame: Not available
MONEY LAUNDERING CRIMINAL
PROSECUTIONS/CONVICTIONS:
Prosecutions: Not available
Convictions: Not available
Assets forfeited: criminally: Not available civilly: Not available
RECORDS EXCHANGE MECHANISM:
With U.S.: YES
With other governments/jurisdictions: YES
Palau is a member of the Asia/Pacific Group on Money
Laundering (APG), a FATF-style regional body. Its most recent
mutual evaluation can be found here:
http://www.apgml.org/documents/docs/17/Palau%202008.pdf
ENFORCEMENT AND IMPLEMENTATION ISSUES AND
COMMENTS:
The Money Laundering Prevention and Control Act (MLPCA),
amended in 2007, addresses many of the deficiencies in the
Government of Palau’s (GOP) AML/CFT regime but does not
include all predicate crimes prescribed in the international
standards. However, the stronger measures are hampered by a
lack of human, financial, and structural capacity, along with an
absence of implementing regulations.
Significant deficiencies remain in the areas of customer due
diligence (CDD), record keeping, monitoring of transactions, and
supervision. The Financial Institutions Commission (FIC) is the
AML/CFT supervisor, but it does not have the resources to ensure
AML/CFT compliance nor to issue any regulations. The
designated non-financial businesses and professions (DNFBPs)
operating in Palau are not covered by the MLPCA.
The Palau Financial Intelligence Unit (FIU) is responsible for
receiving and analyzing SARs, along with tracing, seizing, and
freezing assets, but lacks a dedicated budget and staff. The
GOP, with assistance from the Pacific Anti-Money Laundering
Program (PALP) mentor, organized a multi-agency SAR review
team to review the reports and help identify and initiate
investigations. The multi-agency approach has enabled the FIU to
function given its limitations of manpower and funding, and has
fostered information sharing and joint investigations between the
relevant law enforcement agencies. It is not, however, a long-term
solution, and the GOP should dedicate funds and permanent staff
to the FIU.
The Cash Courier Disclosure Act has been used successfully by
Palau Customs and Security to make bulk cash currency seizures
at the airport. The GOP should extend its excellent monitoring of
the airport to all its border points of entry and exit to protect
against the smuggling of bulk cash, narcotics and other
contraband.
Palau’s Counter-Terrorism Act specifically addresses its obligation
under UN Security Council Resolution 1373. However, it does not
adequately address provisional measures of seizing of evidence
and property and the freezing of capital and financial transactions
related to the financing of terrorism. Palau should strengthen its
ability to freeze and confiscate assets related to the financing of
terrorism. The GOP should circulate the UNSCR 1267 Sanctions
Committee’s consolidated list of terrorist entities. Palau should
also become a party to the 1988 UN Drug Convention, the UN
Convention against Corruption, and the UN Convention against
Transnational Organized Crime.
____________________________________________________
US State Dept Narcotics Report 2011 (introduction):
No report available
____________________________________________________
US State Dept Trafficking in Persons Report 2011
(introduction):
(Tier 2)
Palau is a destination country for women from countries in the
Asia-Pacific region who are subjected to forced prostitution and
people from the Philippines, China, and Bangladesh who are
subjected to conditions of forced labor. The foreign population
including workers and dependents is an estimated 5,000 — more
than one-third of the county’s population of 14,000 — with the
majority from the Philippines, China, and Bangladesh. Some
reports indicate that employers recruit foreign men and women to
work in Palau through fraudulent representation of contract terms
and conditions of employment. Some foreign workers pay
thousands of dollars in recruitment fees and willingly migrate to
Palau for jobs in domestic service, agriculture, or construction but
are subsequently coerced to work in situations significantly
different than what their contracts stipulated. Excessive hours
without pay, threats of physical or financial harm, confiscation of
their travel documents, and the withholding of salary payments
are used as tools of coercion to obtain and maintain their
compelled service. Some women from China and the Philippines
migrate to Palau expecting to work as waitresses or clerks, but are
subsequently forced into prostitution in karaoke bars and
massage parlors. Non-citizens are officially excluded from the
minimum wage law, and new regulations make it extremely difficult
for foreign workers to change employers, consequently increasing
their vulnerability to involuntary servitude and debt bondage.
The Government of Palau does not fully comply with the minimum
standards for the elimination of trafficking; however, it is making
significant efforts to do so. The government has a comprehensive
anti-trafficking law, though it did not investigate or prosecute any
trafficking cases during the year, including neither of two reported
trafficking cases brought to their attention, one for the forced
labor of a Filipina domestic worker, and one for the forced
prostitution of several Filipina women recruited for waitressing. In
the past, the government worked with the local Catholic Church to
offer victim protection services, but did not assist any victims
through this mechanism during the reporting period year. The
government made some efforts to raise awareness of or prevent
trafficking during the year.
For full report click here
____________________________________________________
US State Dept Terrorism Report 2009
Palau worked closely with the United States on counterterrorism.
Local law enforcement officers from the Ministry of Justice,
Ministry of Public Infrastructure, Industries and Commerce, and
the Division of Customs continued to receive training on
counterterrorism from U.S. counterparts. In addition, the Federal
Aviation Administration and the Transportation Security
Administration regularly inspected airport facilities and trained
airport officials on security procedures.
Responding to UN Security Council Resolution 1373, the national
congress passed a Foreign Evidence Act, a Money Laundering
and Proceeds of Crime Act, a Mutual Assistance in Criminal
Matters Act, and an Extradition and Transfer Act in 2001. These
laws are intended to regulate the banking system, criminalize
money laundering, and provide a legal basis for international law
enforcement cooperation. A Financial Intelligence Unit was
established to detect money laundering and other financial crimes.
____________________________________________________
Links:
Worldwide AML Legislation (International Bar Association)
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| Further Tables |
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*Please note that FATF deems that a country has significant aml deficiencies if any
of the 'Core' Recommendations, R1, R5, R10, R13, SRII, or SRIV are rated either
Partially of Non-Compliant. These are marked in red.
For FATF to remove a country from the regular follow-up process, it has to be rated
Compliant or Largely Compliant in the above mentioned Core Recommendations
and the following Key Recommendations: -
R3, R4, R23, R26, R35, R36, R40, SRI, SRIII, SRV
Please also note that any risk assessment should take into consideration all
follow-up reports.
of the 'Core' Recommendations, R1, R5, R10, R13, SRII, or SRIV are rated either
Partially of Non-Compliant. These are marked in red.
For FATF to remove a country from the regular follow-up process, it has to be rated
Compliant or Largely Compliant in the above mentioned Core Recommendations
and the following Key Recommendations: -
R3, R4, R23, R26, R35, R36, R40, SRI, SRIII, SRV
Please also note that any risk assessment should take into consideration all
follow-up reports.
| PALAU |
| KnowYourCountry |
|
|
| Last Updated: 16 April 2012 |