CFATF Statement re AML Strategic Deficiencies: November 20th, 2013
In November 2011 the CFATF brought to the attention of its Members certain jurisdictions including Dominica with significant strategic deficiencies in its AML/CFT regime. With a view to encouraging expeditious rectification of the identified strategic deficiencies Dominica and the CFATF developed an Action Plan with identified target dates to address the strategic deficiencies that existed in Dominica’s national architecture to combat money laundering and the financing of terrorism.
The CFATF issued a public statement in May 2013 recommending that Dominica enact legislation and issue relevant guidelines addressing their AML/CFT deficiencies. Dominica has since brought into force significant mechanisms to address its AML/CFT deficiencies. Dominica and the CFATF should continue to work together to ensure that Dominica’s reform process is completed.
Compliance with FATF Recommendations
The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Dominica was undertaken by the Financial Action Task Force (FATF) in 2009. According to that Evaluation, Dominica was deemed Compliant for 2 and Largely Compliant for 5 of the FATF 40 + 9 Recommendations. It was Partially Compliant or Non-Compliant for 5 of the 6 Core Recommendations.
US Department of State Money Laundering assessment (INCSR)
Dominica is categorised by the US State Department as a Country/Jurisdiction of Primary Concern in respect of Money Laundering and Financial Crimes.
Despite the devastation caused by Hurricanes Irma and Maria in 2017, Dominica made some progress on its AML regime in 2018. Dominica began a national risk assessment (NRA) in 2016. The findings of the NRA will provide a roadmap for the future. Dominica reports there are currently 17 offshore banks regulated by the Financial Services Unit (FSU), which also licenses and supervises credit unions, insurance companies, internet gaming companies, and the country’s economic citizenship program.
EU Commission Tax Blacklist
On 22 February 2021, the EU Commission confirmed that Dominica has been included in the EU list as it received a ‘partially compliant’ rating from the OECD Global Forum for Transparency and Exchange of Information as regards exchange of information on request. For the purposes of the list, the EU requires jurisdictions to be at least ‘largely compliant’ with the international standard on transparency and exchange of information on request.
There are no international sanctions currently in force against this country.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index 55
World Governance Indicator – Control of Corruption 70
The Dominican economy has been dependent on agriculture - primarily bananas - in years past, but increasingly has been driven by tourism as the government seeks to promote Dominica as an "ecotourism" destination. Moreover, Dominica has an offshore medical education sector. In order to diversify the island's economy, the government is also attempting to foster an offshore financial industry and plans to sign agreements with the private sector to develop geothermal energy resources. In 2003, the government began a comprehensive restructuring of the economy - including the elimination of price controls, privatization of the state banana company, and tax increases - to address an economic and financial crisis and to meet IMF requirements. In 2009 and 2013, the economy contracted as a result of the global recession; growth remains anaemic. Although public debt levels continue to exceed pre-recession levels, the debt burden declined from 78% of GDP in 2011 to approximately 70% in 2012.
Agriculture - products:
bananas, citrus, mangos, root crops, coconuts, cocoa
note: forest and fishery potential not exploited
soap, coconut oil, tourism, copra, furniture, cement blocks, shoes
Exports - commodities:
bananas, soap, bay oil, vegetables, grapefruit, oranges
Exports - partners:
Japan 38.1%, Jamaica 19%, Antigua and Barbuda 10.4%, Trinidad and Tobago 6.2%, St. Lucia 4.8%, St. Kitts and Nevis 4.2% (2015)
Imports - commodities:
manufactured goods, machinery and equipment, food, chemicals
Imports - partners:
Japan 42%, Trinidad and Tobago 17%, US 11.9%, China 6% (2015)
Investment Climate - US State Department
The Commonwealth of Dominica (Dominica) remains an emerging market in the Eastern Caribbean with an estimated Gross Domestic Product (GDP) of USD $442.7 million in 2015. Dominica is slowly rebuilding after Tropical Storm Erika struck the island in August 2015, causing an estimated USD $483 million in damages. The Government is focused on reconstruction efforts, which would incorporate a revised macro-economic framework that will include strengthening the fiscal policy framework. To this end, the Government of Dominica signaled its commitment to foster sustainable economic growth and reprioritize current spending and capital expenditures. Investment opportunities largely remain in the services sector, particularly eco-tourism, information and communication technologies and education. Other opportunities exist in alternative energy namely geothermal and capital works. Dominica is a member of the Organization of Eastern Caribbean States (OECS) and the Eastern Caribbean Currency Union (ECCU). According to the Eastern Caribbean Central Bank (ECCB), Dominica’s economy is projected to grow by 4.19% in 2016. Dominica is currently ranked 91st in the World Bank’s Doing Business Report for 2016; falling two places from its 2015 ranking.
The Government of Dominica strongly encourages foreign direct investment, particularly in the sectors of hotel accommodation, including eco-lodges and flagship boutique hotels; nature and adventure tourism services; fine dining restaurants; information and technology services; film, music and video production; agro-processing; manufacturing; bulk water export and bottled water operations; medical and nursing schools; health and wellness tourism; geothermal and biomass industries; biodiversity; aquaculture; and English language training services.
The government instituted a number of investment incentives for businesses considering the possibility of locating in Dominica, encouraging both domestic and foreign private investment. Government policies provide liberal tax holidays, duty-free import of equipment and materials, exemption from value added tax on some capital investments, and withholding tax exemptions on dividends, interest payments and some external payments and income.
Dominica employs a system of eminent domain to pay compensation when property needs to be acquired in the public interest. There were no reported tendencies of the government to discriminate against U.S. investments, companies or landholdings. There are no laws mandating local ownership in specified sectors.
Foreign investors in Dominica can repatriate all profits, dividends and import capital. There are no restrictions on the repatriation of dividends for fully foreign-owned firms; however a mixed foreign-domestic company may repatriate profits to the extent of its foreign participation. Dominica bases its legal system on the British common law system.
Foreign investment in Dominica is not subject to any restrictions, and foreign investors are entitled to receive the same treatment as nationals of Dominica. Dominica uses transparent policies and effective laws to foster competition and establish clear rules for foreign and domestic investors in the areas of tax, labor, environment, health, and safety.
Dominica is a member of the Caribbean Basin Initiative, which permits duty free entry of many products manufactured or assembled in Dominica into markets of the United States. Dominica has no bilateral investment treaty with the United States but has bilateral investment treaties with the United Kingdom and with Germany.
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