Summary Report Money Laundering National Risk Assessment

ORANJESTAD - Aruba Releases Summary Report of its Money Laundering National Risk Assessment.

Introduction

Final NRA Summary Report - February 2021 (Final approved version)As a member of both the Financial Action Task Force (FATF) and the Caribbean Financial Action Task Force (CFATF), Aruba is highly committed to fully comply with the highest international standards in the area of Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT). In compliance with the FATF Recommendations, and also in preparation for the upcoming evaluation by the CFATF of the effectiveness of Aruba’s AML/CFT framework, a National Risk Assessment (NRA) was commissioned by the National AML/CFT Steering Committee, chaired by the Prime Minister. 

The NRA commenced in October 2018 with involvement of more than eighty stakeholders from the public and private sectors. The assessment took approximately 18 months, after which a detailed report and a summary report (for publication purposes) were drafted based on the discussions and outcomes of the NRA. The Chair of the National AML/CFT Steering Committee approved both reports on February 21, 2021. The findings included in the reports take into account Aruba’s economic and geographical environment, its legal, judicial and institutional framework, as well as crime trends. A separate report currently is being drafted to capture the results of the terrorism financing assessment. This report is expected to be finalized soon.

The NRA utilized a methodology and tool developed by the World Bank. This model enables countries to identify the main drivers of money laundering and terrorism financing risks. It provides a methodological process based on understanding of the causal relationships among money laundering risk factors and variables relating to the regulatory, institutional and economic environment. This NRA tool balances the use of quantitative information (data and statistics) with qualitative information. The tool comprises nine interrelated modules. These modules are built on “input variables”, which represent factors related to money laundering and terrorism financing threats and vulnerabilities. ‘Threats’ refer to the scale and characteristics of the proceeds of crime in the country, while ‘vulnerabilities’ refer to weaknesses or gaps in a country’s defenses against money laundering and terrorism financing. Threats and vulnerabilities may exist at the national and the sector level.

Having an NRA and national AML/CFT strategy in place is extremely important for the upcoming 4th round AML/CFT assessment of Aruba by the CFATF taking place in the third quarter of 2021.

Challenges encountered

The NRA process encountered several challenges consisting mainly of difficulties related to the collection of statistics on investigations, prosecutions, and convictions, as well as the insufficient granularity of the available data. Specific information and data on the threats and vulnerabilities to which the different  sectors are exposed were not always available. This lack of available information/data also was due to the limited number of money laundering cases in Aruba. Therefore, in addition to the threats identified on the basis of money laundering cases, the money laundering threats for the various sectors were identified based on data and intelligence from the Centrale Bank van Aruba (CBA), the Financial Intelligence Unit (FIU), other relevant authorities, information from mutual legal assistance requests, information received from the sector representatives during the NRA sessions, and the FATF typology reports.

Key findings

The NRA resulted in an overall money laundering risk rating of Medium-High for Aruba, in part also the result of its geographic location, its excellent infrastructure, and its well-developed financial and business sectors.

The underlying crimes identified as posing the most significant threat of money laundering in Aruba include, inter alia, drug trafficking, bulk cash smuggling, bribery and corruption, and underground banking.

The overall national vulnerability for money laundering is composed of two parts: the overall sectoral vulnerability determined by the outcomes of the vulnerability assessments of the various (private) sectors, and the national combating ability (the strengths/weaknesses in Aruba’s defense mechanisms).

The national and sectoral vulnerabilities of the money laundering combating ability identified the need for, inter alia, a national AML/CFT policy and strategy, strengthening the AML/CFT laws and regulations, a more structured and central collection of data on crimes, criminal proceeds and associated financial flows, stronger border controls, establishing a gaming board, introducing a central ‘ultimate beneficial owner’ (UBO) register for all entities registered in Aruba, measures to counteract corruption, and last but not least, more (specialized) resources to combat money laundering.

Based on the (preliminary) results of the NRA, various authorities already have taken actions to mitigate some of the money laundering risks identified.

Follow-up actions

The Government of Aruba soon will start designing a comprehensive AML/CFT strategy to mitigate the identified money laundering risks, in order of priority. 

Financial service providers and designated non-financial service providers are required to create a link between the NRA and their business-wide risk assessments and subsequent policies, procedures, and measures in order to mitigate and effectively control the money laundering risks to which their sectors are exposed.

Concluding remarks

The Government of Aruba intends to repeat the national risk assessment every 5 years. Should any developments trigger a need for an earlier assessment at the national or sectoral level,  such an assessment will be carried out expeditiously.

Finally, the Government of Aruba wishes to thank all stakeholders from both the public and private sectors that participated in the NRA, as well as Mss. Lisa Bostwick, Molly Silver, Yee Man Yu and Andrea Garzon of the World Bank for providing guidance on the technical aspects and accurate use of the NRA tool and for their feedback on the draft report. A special thanks goes out to Ms. Kiki van der Werf of the CBA and Ms. Sasha Behari of the FIU for the coordination of the NRA. 

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