FATF AML Deficiency List
Offshore Finance Center
US Dept of State Money Laundering assessment
Non - Compliance with FATF 40 + 9 Recommendations
Corruption Index (Transparency International & W.G.I.)
World Governance Indicators (Average Score)
Weakness in Government Legislation to combat Money Laundering
The Republic of the Marshall Islands is not on the FATF List of Countries that have been identified as having strategic AML deficiencies
Compliance with FATF Recommendations
The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in The Republic of the Marshall Islands was undertaken by the Financial Action Task Force (FATF) in 2011. According to that Evaluation, The Republic of the Marshall Islands was deemed Compliant for 5 and Largely Compliant for 16 of the FATF 40 + 9 Recommendations. It was Partially Compliant or Non-Compliant for all 6 of the Core Recommendations.
US Department of State Money Laundering assessment (INCSR)
The Republic of the Marshall Islands was deemed a Jurisdiction of Concern by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR). Key Findings from the report are as follows: -
The Republic of the Marshall Islands (RMI) consists of 29 atolls and five islands, covering 70 square miles of land, spread across 750,000 square miles of ocean. The country is economically underdeveloped and has limited resources for private sector development. The RMI signed a Compact of Free Association with the United States in 1986, and relies on the United States for the majority of its economic support. Although the Marshall Islands accounts for less than one percent of the global market for offshore financial services, making it a tiny player compared with other secrecy jurisdictions, the RMI offshore corporate sector is vulnerable to money laundering.
There are two banks in the country, the Bank of the Marshall Islands and a branch office of the Bank of Guam. There are no brokerage houses or other types of financial firms in the country.
Land is almost never sold due to customary land tenure practices. There are no realtors, nor are there casinos or other entities typically used to launder money. Domestic crime is low, but an analysis of suspicious transaction reports suggests tax evasion, smuggling, prostitution, embezzlement, counterfeit financial instruments, check fraud, and narcotics trafficking on the islands could be predicate offenses for money laundering.
Non-resident domestic corporations (NRDCs), the equivalent of international business companies, can be formed online subject to approval by the Registrar. Marketers of offshore services via the internet promote the Marshall Islands as a favored jurisdiction for establishing NRDCs and handle the incorporation process for applicants. A number of Marshall Islands NRDCs have gone public on exchanges in the U.S. and Europe. NRDCs are allowed to offer bearer shares. Corporate officers, directors, and shareholders may be of any nationality and live anywhere. NRDCs are not required to disclose the names of officers, directors, shareholders, or beneficial owners listed with the Registrar, and corporate entities may act as directors, officers, and shareholders. The Registrar does not release the number of NRDCs or other offshore corporate operations data. The corporate registry program does not allow the registering of offshore banks or insurance firms, online gaming institutions, or other companies which are financial in nature. All known parties to any corporate or maritime transaction are vetted by the Registry through a commercial database, which combines the UN, U.S., EU, and other national and international specially designated national lists. NRDCs must maintain a registered agent in the Marshall Islands, and corporations can transfer domicile into and out of the RMI with relative ease. In addition to NRDCs, the RMI offers resident partnerships, unincorporated associations, and limited liability companies through the Attorney General’s office.
The Trust Company of the Marshall Islands, Inc., the Registrar for NRDCs, and the Office of the Maritime Administrator (collectively the Registry) administer a registration program of corporations and ships. The RMI shipping fleet is the third largest flagged fleet in the world, although few of the vessels frequent the Marshall Islands. The port of Majuro is visited mainly by tuna fishing boats, with a few cargo ships per month delivering food and fuel to the nation.
EU Commission Tax Blacklist
On 10 October 2019, the EU Council agreed to remove the Marshall Islands from the EU's list of non-cooperative jurisdictions for tax purposes as it had passed the necessary reforms to implement the commitments they had made to improve by the end of 2018 their tax policy framework by introducing economic substance requirements.
The Marshall Islands will be moved from annex I of the conclusions to annex II as the country's commitments regarding exchanges of information on request continue to be monitored by the Council's code of conduct group pending the results of the review of the OECD's Global Forum on transparency and exchange of information.
There are no international sanctions currently in force against this country.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index N/A
World Governance Indicator – Control of Corruption 55
US assistance and lease payments for the use of Kwajalein Atoll as a US military base are the mainstay of this small island country. Agricultural production, primarily subsistence, is concentrated on small farms; the most important commercial crops are coconuts and breadfruit. Industry is limited to handicrafts, tuna processing, and copra. Tourism holds some potential. The islands and atolls have few natural resources, and imports exceed exports.
The Marshall Islands received roughly $1 billion in aid from the US during 1986-2001 under the original Compact of Free Association (Compact). In 2002 and 2003, the US and the Marshall Islands renegotiated the Compact's financial package for a 20-year period, from 2004 to 2024. Under the amended Compact, the Marshall Islands will receive roughly $1.5 billion in direct US assistance. Under the amended Compact, the US and Marshall Islands are also jointly funding a Trust Fund for the people of the Marshall Islands that will provide an income stream beyond 2024, when direct Compact aid ends.
Agriculture - products:
coconuts, tomatoes, melons, taro, breadfruit, fruits; pigs, chickens
copra, tuna processing, tourism, craft items (from seashells, wood, and pearls)
Exports - commodities:
copra cake, coconut oil, handicrafts, fish
Imports - commodities:
foodstuffs, machinery and equipment, fuels, beverages, tobacco
Investment Climate - US State Department
The Republic of the Marshall Islands (RMI) is part of the former U.S.-administered Trust Territory of the Pacific Islands that gained independence in 1986 and continues to use the U.S. dollar as its currency. Since independence it has operated under a Compact of Free Association (Compact) with the United States, receiving more than USD100 million per year in development funding administered mainly by the Department of the Interior (DOI). Compact Sector Grant Funding will continue until 2023.
The Government of the Marshall Islands encourages foreign investment and recognizes its important role in growing private sector development. The government particularly encourages foreign investment in fisheries, tourism, and agriculture and provides certain investment incentives for foreign investors. Most local government officials encourage foreign investment, though attitudes may differ from island to island. Foreign investment in the Marshall Islands is complicated, however, by laws that prevent non-Marshallese from purchasing land. There is no public land in the country, and foreign businesses must lease land from private landowners in order to operate in the country.
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