Montserrat’s “limited financial system, its unique context, and inherent circumstances” limit its attractiveness for illicit activities, a recently published report says.
The locally produced National Risk Assessment gives the island a ‘medium-low’ risk rating for money laundering and a ‘low’ risk rating for terrorist financing.
A team, supervised by the National Anti-Money Laundering and Countering Terrorist Financing Committee, determined the ratings by analysing data from 2019 to 2023.
They looked at the proceeds of crime generated, the number of cases reports, the conviction rates, and the number of predicate offences in Montserrat.
They also adopted a holistic approach to fully understand the national perspective by including the impact of various factors, the report says.
These included the strength of the legal framework, economic indicators, geographic location, political and social stability, and transparency.
Where statistical data was unavailable, the assessment team relied on their understanding of the jurisdiction, and information obtained from open-source channels.
Areas of concern
The 140-page report lists several predicate offences – underlying criminal acts for financial crimes – that pose a risk for Montserrat.
They are sexual exploitation including sexual exploitation of children, fraud, trafficking in human beings and migrant smuggling, tax crimes and illicit drugs trafficking.
“The primary threats in Montserrat stem mainly from domestic sources, involving relatively small values,” the report says.
“For those originating from foreign sources, values are either limited or unaccounted.”
Sexual exploitation of children is rated as a ‘medium’ money laundering threat based on the severity and nature of cases in the jurisdiction.
The “limited instances” of human trafficking and the context of Montserrat also led to a ‘medium’ money laundering threat rating, the report adds.
It went on to say that tax crimes, including tax evasion and fraud, are a concern for Montserrat as the island has nine pending cases related to tax offences.
The assessment team assigned a ‘medium’ money laundering threat rating and said to address the issue, Montserrat has initiated stronger frameworks and recruited tax experts.
Illicit drugs trafficking was also given a ‘medium’ money laundering threat rating.
The report says that during the five-year period reviewed, the primary drug smuggled into Montserrat is cannabis – but infrequently and in relatively small proportions.
It adds that the island has strict anti-money laundering legislation for this as the possession of any controlled substance, regardless of its quantity, is prohibited under the law.
Mitigating risk
The sectors that are most vulnerable to money laundering are credit union, money service business, domestic bank, real estate and legal professionals.
The assessment team also identified three key priority areas of focus within Montserrat’s national money laundering combatting framework.
It lists them as quality and accessibility of intelligence gathering and processing, quality of national policy and strategy, and capacity and resources of investigation and prosecutions.
As a result, there are several actions which Montserrat is taking over the next few years to mitigate money laundering and terrorist financing risk as detailed in the report.
Regulatory authorities will develop, formalise and maintain an administrative arrangement to ensure the appropriate enforcement of databases, risk assessments and frameworks.
They will transition to a risk-based supervisory regulatory framework, and increase the frequency of regulatory supervision and outreach to stakeholders.
There will be an increase human resources in all competent agencies to more efficiently meet needs to ensure that appropriate levels of resources are available.
Authorities will develop appropriate financial sanctions and enforcement mechanisms, and strengthen domestic and international cooperation.
And they will enhance intelligence gathering and sharing mechanisms, as well as improve, develop and implement appropriate data collection and analysis systems and tools.
Money laundering regulation
Three fundamental laws govern the money laundering landscape in Montserrat.
They are the Proceeds of Crime Act, the Anti-money laundering and terrorist financing (Amendment) Regulations, and the Anti-Money Laundering and Terrorist Financing Code.
“These laws play a pivotal role in ensuring the effective regulation and prevention of money laundering and terrorist financing activities in the jurisdiction,” the report says.
Multiple authorities are responsible for effective implementation of the anti-money laundering regime.
Among them are the Reporting Authority, the National Anti-Money Laundering and Countering Terrorist Financing Committee and the Attorney General’s Chambers.
The Financial Services Commission serves as the supervisory body for licencing, supervision, and regulation on matters of financial stability and anti-money laundering.
The National Risk Assessment will be subject to regular reviews which a proposed timeframe of every two to three years.
The committee will determine the frequency of the reviews based on the island’s success in mitigating national or sector-specific threats and vulnerabilities.
“If a more immediate evaluation becomes necessary, the assessment will be promptly carried out,” the report says.
