The Cook Islands parliament has passed new money laundering legislation in the shape of the Money Laundering Prevention Act, which is designed to get the country taken off the Financial Action Task Force (FATF) blacklist of tax havens deemed to have inadequate money-laundering controls. The new Act provides for the setting up of a Money Laundering Authority, to consist of the government's financial secretary (in the chair), the commissioner for offshore financial services and the commissioner of police.
The powers and duties of the new body include receiving reports from financial instutions on any suspected criminal business transactions and the passing of such reports, if backed up by reasonable evidence, to the solicitor-general. The authority is also empowered to issue training guidelines to financial institutions in terms of anti-money laundering procedures. The Money-Laundering Prevention Act has a section overriding any other secrecy provisions. Cook Islands Prime Minister Dr Terepai Maoate said the Act would construct barriers to stop illicit funds being introduced into the financial system and stated: 'the government is concerned to safeguard our international reputation and remove the Cook Islands from the FATF list of non-cooperative countries as soon as possible.'
The financial institutions which the new Act covers are wide ranging and include money-transmission services, those which issue and administer means of payment (such as credit cards, travellers' cheques and bankers' drafts), and gambling and other betting services incorporated in the Cook Islands. Offences under the new legislation are punishable by up to a maximum fine of US$20,000 dollars or a jail term of up to five years, or even a combination of both.
Offshore financial services commissioner Mathilda Uhrle said the new legislation addresses each of the issues identified in the report on the Cook Islands, that was principally compiled by Detective Senior Sgt Pat O'Sullivan. He was the New Zealand member of the FATF Asia-Pacific review group, an FATF regional unit. The Cook Islands was targeted, despite its insistence that it was continuing to "strengthen its anti-money laundering initiatives". Uhrle said that since the FATF blacklisting, both she and the Cook Islands Trustee Companies' Association have continued their dialogue with the FATF Asia-Pacific review group to keep them informed of the Cook Islands anti-money laundering regime plans. The Japanese chief of the Asia Pacific review group, Hideaki Suzuki, is said to be impressed with the Cook Islands response to its report
The new legislation becomes law once assented to by the Queen's representative. It makes provision for financial institutions to obtain and retain customer identification and they will have an obligation to report suspicious transactions. It also makes provision for mutual legal assistance to foreign states where a money-laundering offence has occurred in that foreign state, and for the freezing and forfeiture of property.
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