This report provides a summary of the anti-money laundering (AML) and combating the financing of terrorism (CFT) measures in place in Aruba, the Kingdom of the Netherlands at December 2008 (the date of the on-site visit) and immediately thereafter. It describes and analyses those measures and provides recommendations on how certain aspects of the system could be strengthened. It also sets out Aruba’s level of compliance with the Financial Action Task Force (FATF) 40+9 Recommendations (see the table Ratings of Compliance with the FATF Recommendations).
- The level of criminality in Aruba is generally not high, but has increased considerably over the last 10 years. Due to its geographical location and travel facilities, money laundering is primarily linked to drug trafficking and risks have been identified for cross border movement of cash, in the real estate and jewellery sectors and through misuse of exempt companies. Terrorist financing has not been seen as a major risk to date.
- Aruba’s economic system is currently largely based on tourism and oil refining; but the island has actively sought to diversify its economy, in particular by developing its off-shore activities, through the licensing of offshore banks, though in a limited number, and the development of offshore companies. However, the measures in company and other laws to ensure the transparency and integrity of these vehicles are inadequate. The introduction in February 2009 of the State Ordinance Supervision Trust Company Services Providers is aimed at regulating trust and company service providers, and this will help. However, there is still a significant weakness, as TCSPs are still not subject to basic AML/CFT requirements. Aruban corporate vehicles represent a substantial risk for misuse by launderers and other criminals, and rapid and significant progress is required.
- Aruba enhanced its ML offence in 2006, and has since taken effective prosecution action against money launderers. However, Aruba has chosen not to criminalise terrorist financing as required by SR. II, considering that terrorist financing activity can be adequately dealt with through existing provisions of the Criminal Code such as the ancillary offences of preparation or participation or complicity in a terrorist attack, or being a member of a terrorist organisation. This argument is rejected by the assessment team, and Aruba is strongly urged to urgently criminalise TF as a separate and independent offence. Similarly urgent action is needed to implement UNSCR 1267 and 1373.
- In general, Aruba’s system of AML/CFT preventive measures is incomplete and lacks coherence and effectiveness. Aruba should urgently review the structure of the regime, including the legislation and dedicate more resources to the agencies in charge of AML/CFT. Aruba should also give clearly defined tasks and priorities to each of those agencies.
- There are many financial activities being performed by financial institutions that are neither regulated nor supervised. These financial institutions are not subject to AML/CFT requirements, which creates potential opportunities that could be misused by money launderers and other criminals.
- The basic preventive legislation for AML/CFT is set out in two state ordinances, one dealing with Customer Due Diligence requirements, and the other with the reporting obligations. However the legislative requirements have many gaps relative to the FATF standards, and this is exacerbated by a lack of clarity and consistency in the scope and the extent of the obligations. Aruba should rectify this, and should seriously consider preparing completely new and coherent legislation dealing with all the deficiencies and implement all the FATF requirements.
- The AML/CFT supervision of most of the FIs is currently handled by both the MOT (Aruban FIU) and the Central Bank of Aruba (CBA), which creates overlap and an inefficient use of already limited resources. The supervision should thus be reorganised and strengthened, including the introduction of a significantly more robust enforcement culture. It is logical that the CBA should supervise all types of financial institutions for all their AML/CFT obligations as this would result in a more consistent and better organised approach to supervision. The CBA should consult with the FIU on a regular basis.
- A basic system for international co-operation is in place, but Aruba should introduce a number of enhancements both at the judicial and administrative levels. Consideration should also be given to reviewing and updating the legislation.