FATF

The Salwai Government leadership must be applauded for its effort to remove Vanuatu from the FATF 40 Grey List.

Almost there. Credit should also go to the Anti-Money Laundering (AML) and Counter Terrorism National Coordinating Committee and of course, the Vanuatu Financial Intelligence Unit.

The 31 or so legislations passed in Parliament in 2016 and 2017 must be implemented.

The 11-year-old AML concerns were first highlighted in a 2006 report by the Asia Pacific Group (APG) on money laundering.

In 2015, the National Risk Assessment report estimated that between VT1.8 billion and VT4.5 billion in proceeds of foreign crimes are laundered through Vanuatu’s offshore financial system every year.

Following are the three major lessons learned:

Lesson one: Political and government stability is vital in government service delivery. The Prime Minister has the main responsibility on anti-money laundering and anti-terrorism financing.

So, tackling the anti-money laundering issued raise in 2006 depends on the Prime Minister.

If the Prime Minister keeps changing every now and then, anti-money laundering and other policy problems, cannot be solved.

Over the last 11 years (2006-2017), Vanuatu had 13 prime ministers and about the same number of ministers for finance, trade and internal affairs.

These are the four main ministries that must make some changes to remove Vanuatu from the FATF40 grey list.

Of course, there were concerns about the extra spending that the government must pay in order the maintain government stability.

In the future, there is opportunity to make changes that creates government stability without jeopardizing public spending.

Lesson two: Capacity building and knowledge sharing must flow top-down, bottom-up and in cross-sectoral directions. Some policy problems are too complex for the non-experienced to quickly grasp. The complexity of the money laundering problem increased when it evolved into a cross sectoral issue beyond the banking sector.

To enhance the effectiveness of the regulatory framework, lawyers have to understand terms and concepts of finance and taxation; the financial regulator has to understand legal concepts, processes and terms; the Police Force has to understand financial and legal concepts, terms and processes; and people transacting in Vatu or any currency, locally or overseas, have to understand the risk of money laundering to protect themselves or their clients.

Now that the legislations are passed, capacity building and knowledge sharing has to reach every citizen.

Public awareness on the new changes must be done to prevent citizens from losing valuable assets unintentionally.

Nobody wants to sit back and watch the court freezing or confiscating their assets.

At the supervisory and government level, knowledge sharing must flow top-down, bottoms-up and cross-sectional direction.

This will enhance the efficiency regulatory exercise and prevent regulators from repeating past mistakes.

Knowledge sharing is usually addressed through close coordination and by investing in a knowledge bank online or offline within the government system.

Lesson three: The quality of coordination is vital when many agencies collaborate to solve one problem. This is obvious. The AML/CTF National Coordinating Committee comprised high level representatives from the Prime Minister’s Office, the Ministry of finance and Economic Management, the Ministry of Justice, the Attorney General, Reserve Bank, the Police Force and other agencies.

The quality of their coordinated effort is reflected in the passing of the many bills in 2016 and 2017.

The passing of the bills is just one big step forward.

There remains many work to be done.

That kind of good quality coordination is still needed during implementation of the passed legislations and during periodic reviews in the future.

As for now, congratulations to the Government for the service delivered to the people.

  • Author’s Note: The views expressed here are my own
  • and not necessarily that of the Asian Development Bank or the Reserve Bank of Vanuatu.

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