FATF AML Deficiency List
US Dept of State Money Laundering assessment
Non - Compliance with FATF MER Recommendations
Corruption Index (Transparency International & W.G.I.)
World Governance Indicators (Average Score)
Weakness in Government Legislation to combat Money Laundering
Palau 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 Palau was undertaken by the Financial Action Task Force (FATF) in 2008. According to that Evaluation, Palau was deemed Compliant for 4 and Largely Compliant for 10 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)
Palau was deemed a ‘Monitored’ Jurisdiction by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR). Key Findings from the report are as follows: -
Palau is not a regional or offshore financial center. The primary sources of illegal proceeds are illegal drugs and prostitution. 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 terrorism 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 designated free trade zone area, and the NFTZ directors continue to search for developers and investors.
EU Tax Blacklist
Palau is on the EU list of non-cooperative jurisdictions for tax purposes
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 36
The economy consists of tourism and other services such as trade, subsistence agriculture, and fishing. Government is a major employer of the work force relying on financial assistance from the US under the Compact of Free Association (Compact) with the US that took effect after the end of the UN trusteeship on 1 October 1994. The US provided Palau with roughly $700 million in aid for the first 15 years following commencement of the Compact in 1994 in return for unrestricted access to its land and waterways for strategic purposes. The population enjoys a per capita income roughly double that of the Philippines and much of Micronesia.
Business and leisure tourist arrivals numbered over 125,000 in fiscal year 2014, a 13.4% increase over the previous year. Long-run prospects for tourism have been bolstered by the expansion of air travel in the Pacific, the rising prosperity of industrial East Asia, and the willingness of foreigners to finance infrastructure development. Proximity to Guam, the region's major destination for tourists from East Asia, and a regionally competitive tourist infrastructure enhance Palau's advantage as a destination.
Agriculture - products:
coconuts, copra, cassava (manioc, tapioca), sweet potatoes; fish
tourism, craft items (from shell, wood, pearls), construction, garment making
Exports - commodities:
shellfish, tuna, copra, garments
Imports - commodities:
machinery and equipment, fuels, metals; foodstuffs
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