Risk Indicators
- FATF/EU Blacklist/Greylist (Lower Concern)
- Terrorism Financing (Lower Concern)
- US Dept of State INCSR
- Proliferation Financing
- Corruption
- Criminality
- Resilience & Governance
- Financial Transparency
- Offshore Finance Centres
- Sanctions
Background
Polynesian settlement of the Cook Islands began with voyages from Tahiti, Samoa, and Tonga, with Rarotonga emerging as a central island in a network of travel and trade rather than a unified state. European encounters later brought the islands into the orbit of Britain and New Zealand, including Queen Makea Takau’s 1888 petition and the 1915 Cook Islands Act. Since 1965, the Cook Islands has governed itself in free association with New Zealand, which retains responsibility for defense and foreign affairs, while the United States recognized its sovereignty in September 2023.
Positioned near French Polynesia, American Samoa, Samoa, and New Zealand, the Cook Islands is surrounded largely by stable jurisdictions but remains attentive to shifting regional political and security conditions. Unrest in New Caledonia during 2024, Samoa’s constitutional tensions following the 2021 elections, and debates over Māori rights in New Zealand illustrate the varied challenges nearby. Sanctions exposure appears limited overall, although New Zealand’s implementation of UN and autonomous sanctions—and awareness of offshore and complex-company risks—adds a discreet regional compliance dimension.
AML & Terrorist Financing
The Cook Islands has a generally strong AML/CFT framework and is not identified by FATF as having strategic deficiencies, with the Financial Supervisory Commission and Cook Islands Financial Intelligence Unit playing central supervisory and intelligence roles. However, its internationally exposed offshore sector—including banks, trustee companies, and structures benefiting from privacy and asset-protection provisions—remains vulnerable to the misuse of legal persons and arrangements and the layering of proceeds originating overseas. Key challenges include limited law-enforcement use of financial intelligence in pursuing domestic proceeds, uneven preparedness for terrorism-financing investigations, and gaps affecting proliferation-financing sanctions supervision despite beneficial-ownership and international cooperation mechanisms.
Sanctions
Cook Islands applies targeted financial sanctions against designated terrorist and proliferation-related entities under the Countering Terrorism and the Proliferation of Weapons of Mass Destruction Act 2004, incorporating obligations arising from UNSC Committees 1267/1989/2253 and 1988. Its Maritime Cook Islands registry has faced scrutiny over vessels linked to Iranian oil, Russian military shipments, and suspected evasion routes, prompting deflagging actions and the launch of a Vessel Verification Portal, while external data identified Cook Islands–flagged ships on U.S. and UK sanctions lists. No international sanctions are currently in force against Cook Islands itself, although New Zealand has paused aid and suspended high-level diplomatic contacts amid concerns highlighted by RISC’s removal and sanctions-related compliance disputes.
Criminality
The available material provides no substantive account of crime or corruption conditions in the Cook Islands. Consequently, the prevalence of misconduct and the effectiveness of institutional responses remain unclear from the information provided.
Industry/Product Sector Risk
Cook Islands’ industry profile combines a tourism-led domestic economy with a comparatively significant offshore financial centre, where the Financial Supervisory Commission oversees a small but varied financial and professional-services sector. Particular attention surrounds international trusts, trustee companies, wealth management, correspondent banking and remittance channels, while cash-based hospitality, retail, fisheries and construction activities present more localized exposure. The Ministry of Marine Resources, the FIU and other authorities operate within a close-knit island environment where risks linked to foreign fraud, corruption, illegal fishing, cyber-enabled crime and sanctions-sensitive shipping intersect with limited specialist capacity.
Economy & Investment Climate
The Cook Islands’ economy is dominated by tourism, contributing roughly 67.5% of GDP, while fishing, agriculture, fruit processing, handicrafts, and offshore financial services provide additional activity amid continued reliance on New Zealand support. Geographic isolation, constrained land and resources, and environmental pressures shape its prospects, even as investment linked to tourism and agriculture expands under a legal framework noted for asset-protection trusts and trade flows led by New Zealand, Japan, Thailand, and other partners.
Cryptocurrency Regulations
Cryptocurrency remains neither legal tender nor clearly classified in the Cook Islands, with the Financial Supervisory Commission and Financial Intelligence Unit operating within broader AML and financial oversight frameworks rather than a dedicated virtual-asset regime. The Financial Transactions Reporting Act 2017 provides some foundation for due diligence, while the proposed Tainted Cryptocurrency Recovery Bill 2023 and the absence of clear VASP, taxation, exchange, tokenization, and investor-protection rules point to a regulatory landscape still taking shape.
Get full access
The information on this page is a brief summary. Get access to EDD country reports, all risk category scores and customisable weightings for 245 jurisdictions.