Fiji’s financial system is more likely to be at risk from money laundering than terrorist financing, a recent report compiled by the Financial Intelligence Unit (FIU) has found.
Released early last month, the report titled: ‘Money Laundering and Terrorist Financing Risk in Fiji’s Banking Sector’ was the result of an assessment carried out by FIU in 2021 and 2022 on the extent of money laundering (ML) and terrorist financing (TF) risk in Fiji’s banking sector.
“The TF (Terrorist Financing) threat faced by banks in Fiji is assessed as low,” FIU stated in its report.
“There has been no substantive case or other indicators of TF activities or transactions taking place through Fiji’s banks.
“However, the threats that banks face from ML and predicate crimes is assessed as high.
“This assessment is based on the reports of suspicious transactions received from the banks and intelligence from law enforcement agencies and the FIU.”
It said majority of the reports of suspicious transaction received from banks after the FIU’s analysis were disseminated in intelligence reports to the Fiji Revenue and Customs Services for possible tax evasion or related crimes and to the Fiji Police Force for possible offences under the Crimes Act, Proceeds of Crime Act and other laws.
“Intelligence from key law enforcement agencies including the FIU strongly suggest that substantial proceeds linked to financial crimes such as tax evasion, fraud, cybercrime and drug related crimes are being channeled through bank accounts of individuals and entities involved and their associates.”
The report also found that commercial banks were more at risk from the products they offer — which allowed for fast transactions and anonymity — than from their customers.
“Banks in Fiji offer a wide range of products and services vulnerable to ML/TF. Banks conduct large volumes of cash transactions (deposits and withdrawals).
“Basic transaction accounts allow customers to easily conduct cash deposit and withdrawal transactions at the branches and mostly using the wide network of ATMs throughout Fiji. All the banks in Fiji provide their products and services through similar delivery channels which include ATMs point of sale (EFTPOS), internet or online banking; mobile phone banking; branch banking; and agency banking.
“These delivery channels offer a degree of speed and anonymity which are preferred by criminals to conduct their transactions.
“All banks frequently transact with Fiji’s major trading partner countries including countries with global financial centres.
“Five banks are branches of international banks which provides them with a wider global reach.
“The vulnerability that banks in Fiji face from their customers is assessed as medium.
“The vulnerability that banks face from the products and services they offer, channels of delivery of their products and services and countries they engage with is assessed as high.”
Financial institutions in Fiji are required by law to comply with the requirements under the Financial Transactions Reporting (FTR) Act and Regulations on anti-money laundering (AML) and combating the financing of terrorism (CFT) measures.
This obliges them to report various financial transactions to the FIU.
According to the report, between 2019 and 2021, out of a total of 1272 Suspicious Transactions (STRs) received by FIU, 67 per cent were from commercial banks; out of 1.98 million Cash Transaction Report it received, 99 per cent were from commercial banks while out of 1.03 million Electronic Funds Transfer Reports it received in 2021, 19 per cent were from commercial banks.