Vanuatu Tightens Offshore Banking Laws

by Mary Swire, Tax-News.com, Hong Kong

25 November 2002

In a radio interview given last week, Vanuatu's Finance Minister, Sela Molisa revealed that a new International Banking Act designed to place the jurisdiction's international and offshore banks under the supervision of the Reserve Bank of Vanuatu has been passed by Parliament.

'That bill now allows offshore banks to continue, but their supervision will be done by the Reserve Bank of Vanuatu. Currently the Vanuatu Financial Services Commission supervises these banks,' he explained, adding that in view of the need for increased anti-money laundering vigilance:

'We have to shift the supervision of these banks, offshore banks, to the Reserve Bank because the Reserve Bank has a better networking (relationship) with...counterparts in all other countries.'

Although Vanuatu has secured removal from the FATF's list of countries considered vulnerable to money laundering activity, it remains on the OECD's harmful tax competition list, a state of affairs which the Finance Minister hopes will soon change, due to recent efforts.

When questioned as to whether any drop in revenue is expected as a result of the new tougher regulatory procedures, Mr Molisa observed that:

'The Finance Centre contributes about 11% to 12% to Vanuatu's GDP. So it is important, significant...we'd like to see it continue. But we want to be seen as a good, clean centre. We don't want money laundering passing through Vanuatu.'

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