Countries/Jurisdictions of Primary Concern - Maldives
Maldives is comprised of a series of atolls in the Indian Ocean and is bisected by a number of international sea lanes. Authorities have expressed concern the islands are being used as a transit point for money laundering and illegal immigration to Europe. The country has a small financial market but is susceptible to money laundering and terrorist financing due to limited oversight capacity.
No official figures are available, but anecdotal evidence suggests illegal drug trafficking, a large black market for the purchase of dollars, and corruption produce significant amounts of illegal funds. Drug trafficking is noted as one of the most frequent asset-generating crimes. Other offenses include human trafficking, piracy, and offenses committed by gangs. Even though the number of corruption cases is low, only a small percentage is prosecuted, and reports indicate the sums involved can be significant. There are indications funds raised in the country have been used to finance terrorism activities abroad. While no official studies have been conducted, the Maldivian Central Bank confirms that, according to suspicious transaction reports (STRs), criminal proceeds mainly come from domestic sources.
The Maldives Monetary Authority reports that informal value transfer systems such as hawala are being used to transfer funds between the islands, although the extent to which these systems are used to launder money is still unclear.
For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found at: http://www.state.gov/j/ct/rls/crt/
DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR ILLEGAL DRUG SALES THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO
CRIMINALIZATION OF MONEY LAUNDERING:
“All serious crimes” approach or “list” approach to predicate crimes: List approach
Are legal persons covered: criminally: NO civilly: YES
KNOW-YOUR-CUSTOMER (KYC) RULES:
Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: YES
KYC covered entities: Banks, the securities sector, insurance industry, finance corporations, and money transfer services
Number of STRs received and time frame: 8 in 2013
Number of CTRs received and time frame: Not available
STR covered entities: Banks, the securities sector, insurance industry, finance corporations, and money transfer services
MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:
Prosecutions: 0 in 2013
Convictions: 0 in 2013
RECORDS EXCHANGE MECHANISM:
With U.S.: MLAT: NO Other mechanism: YES
With other governments/jurisdictions: YES
Maldives is a member of the Asia/Pacific Group on Money Laundering, a FATF-style regional body. Its most recent mutual evaluation can be found at:
ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:
Maldives’ AML/CFT framework is in need of considerable improvements, both in terms of substance and implementation. Money laundering is not specifically designated as a crime under Maldivian law. Money laundering is criminalized only with respect to proceeds of offenses listed in the Drugs Act. Although all categories of offenses set out in the international standards have been criminalized, only drug-related offenses are considered predicate offenses for money laundering, constituting a major shortcoming of the current AML/CFT regime. In addition, terrorism financing is not criminalized as an autonomous offense. It is covered to a limited extent under the “aiding and abetting” clause of terrorism legislation. At the end of 2013, an AML/CFT bill is being considered by Parliament and is expected to pass.
In order to conduct a national risk assessment on money laundering and terrorism financing, the Government of Maldives needs to improve its capabilities. Several key institutions suffer from inadequate resources, including the Financial Intelligence Unit (FIU), financial sector supervisors, prosecutorial and investigative authorities, and judicial authorities. The Government of Maldives is currently working with international agencies to obtain technical assistance and training for these agencies.
Efforts to provide adequate supervision of the financial sector are still in the initial stages. The Maldives Financial Transactions Reporting Regulation, implemented by the Central Bank in 2011, requires financial institutions to submit a weekly report of financial transactions of Maldivian rufiya 200,000 (approximately $13,000) or more, or its equivalent in a foreign currency. Approximately 1,050 currency transaction reports (CTRs) are filed with the FIU every week. Authorities should take steps to ensure better compliance and understanding of AML/CFT requirements and should expand KYC and reporting requirements to include insurance agents, finance companies, money remitters and exchanges, credit card companies, lawyers, accountants, and auditors active in the country. The government also should extend its safe harbor provisions to nonbank entities.
Asset forfeiture provisions are very limited. The Government of Maldives should ensure all appropriate assets or their equivalent value can be identified and forfeited in line with international standards. Maldives Police Services, the Prosecutor General’s Office, and the judiciary should work on capacity building and training to enhance their abilities to enforce the existing AML/CFT system.
On February 4, 2013, the Government of Maldives became a party to the UN Convention against Transnational Organized Crime.