Vanuatu Country Summary

FATF Status

Vanuatu was removed from the FATF List of Countries that have been identified as having strategic AML deficiencies on 29 June 2018.

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Vanuatu was a follow-up Evaluation that took place in August 2018. According to that Evaluation, Vanuatu was deemed Compliant for 18 and Largely Compliant for 19 of the FATF 40 Recommendations. It was also deemed Highly Effective for 0 and Substantially Effective for 0 with regard to the 11 areas of Effectiveness of its AML/CFT Regime.

Vanuatu faces significant challenges related to crime and corruption, particularly in the realms of human trafficking, environmental crimes, and financial misconduct. While the country has made strides in anti-corruption efforts and improved governance transparency, it remains vulnerable due to limited resources in law enforcement and a high-risk financial environment that attracts illicit activities.

Vanuatu's economy is heavily dependent on subsistence agriculture and tourism, which exposes it to vulnerabilities from external shocks like natural disasters and global economic changes. The country, classified as lower-middle income, relies significantly on agricultural products such as copra and kava, supporting around 65% of its population, while facing challenges like high public debt and inflation. Despite these economic hurdles, Vanuatu is witnessing a post-pandemic recovery with a projected GDP growth rate of 2.21% in 2023, and its investment climate is bolstered by its tax haven status, although concerns about political stability and governance persist.