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Vanuatu

Last updated: 01/10/2009

CENTRAL AUTHORITY FOR REPORTING

The Financial Transaction Reporting Act (FTRA) of 2000 established the Vanuatu Financial Intelligence Unit (VFIU) within the State Law Office. Under the Financial Transactions Reporting (Amendment) Act (FTRAA) of 2005, the VFIU has a role in ensuring compliance by financial services sector with financial reporting obligations. Currently, the VFIU does not have a website.

OTHER ANTI-MONEY LAUNDERING REGULATOR(S)

ARE LAWYERS COVERED BY ANTI-MONEY LAUNDERING LEGISLATION?

Yes. The FTRAA 2005 extended anti-money laundering obligations under the FTRA 2000 to lawyers. However, these obligations apply only to the extent that the lawyer receives funds in the course of his or her business for the purpose of deposit or investment, or settling real estate transactions (Article 2(k) FTRA 2000).

LIST THE LAWS REGARDING ANTI-MONEY LAUNDERING, INDICATING WHICH LAWS ARE APPLICABLE TO LAWYERS.

Primary Legislation for lawyers:

Financial Transactions Reporting Act 2000 (amended). The original Act of 2000 was amended by the Financial Transactions Reporting (Amendment) Act No.28 of 2005.

Secondary Legislation:

ARE VISITING LAWYERS SUBJECT TO LOCAL LAWS REGARDING ANTI-MONEY LAUNDERING, AND, IF SO, TO WHAT EXTENT?

No information available.

LIST ANY MONEY LAUNDERING GUIDANCE FOR LAWYERS (FOR EXAMPLE, LAW SOCIETY OR BAR ASSOCIATION GUIDELINES) CURRENTLY IN PLACE.

According to a report conducted by the Asia Pacific Group on Money Laundering (AGP), a regional-styled Financial Action Task Force (FATF) in March 2006, as of the time of the on-site inspection, no guidelines for lawyers had been issued.

IS THE LAW SOCIETY/BAR ASSOCIATION INVOLVED IN SUPERVISING OR ENFORCING COMPLIANCE WITH ANTI-MONEY LAUNDERING REGULATIONS?

According to the AGP’s report, the Law Council is only involved in prescribing the necessary qualifications for legal practitioners, keeping a register of all legal practitioners in Vanuatu, carrying out disciplinary actions, regulating conduct of practitioners and providing for the legal education and training of legal practitioners.

There is no specific supervision on enforcing compliance with money laundering regulations.

DESCRIBE CLIENT DUE DILIGENCE REQUIREMENTS, INCLUDING WHEN IT MUST BE UNDERTAKEN BY LAWYERS.

Under Article 10 FTRA 2000, client due diligence requirements consists solely of verifying the customers’ identity and, in the case where a lawyer believes that the customer is conducting the transaction on behalf of another person or person, verifying the beneficiaries’ identity.

These requirements only apply for transactions, the value which exceeds VT 100 million, or its equivalent in a foreign currency, or any such other amount as prescribed by an authorised body.

Failure to do so will render the lawyer guilty of an offence punishable by conviction:

  • In the case of an individual - by a fine not exceeding VT 2.5 million or imprisonment for a term not exceeding 2 years, or both; or

  • In the case of a body corporate - by a fine not exceeding VT 10 million.

DOES YOUR COUNTRY FOLLOW A RISK-BASED APPROACH TO CLIENT DUE DILIGENCE BY LAWYERS?

No information available.

ARE THERE ENHANCED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, POLITICALLY EXPOSED PERSONS?

No information available.

ARE THERE SIMPLIFIED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, LISTED COMPANIES?

Under Article 10 FTRA 2000, lawyers are exempt from the due diligence provision of verifying the identity of a customer when he or she is a “financial institution” for the purposes of the FTRA 2000.

These entities include the Reserve Bank of Vanuatu, banking institutions, insurers, money exchangers, licensed casinos, accountants, credit unions and electronic businesses, amongst others.

A complete list can be found in Article 2 FTRA 2000.

ARE LAWYERS PERMITTED TO RELY ON THIRD PARTY DUE DILIGENCE? IF YES, PLEASE DESCRIBE.

No information available.

WHEN IS A LAWYER UNDER AN OBLIGATION TO REPORT SUSPICIOUS TRANSACTIONS?

Under Article 5 FTRA 2000, lawyers are obliged to report a suspicious transaction when they have reasonable grounds to suspect that the transaction or proposed transaction is or may be relevant to either the investigation or prosecution of any person for a money laundering offence; or the enforcement of the Serious Offences (Confiscation of Proceeds) Act No. 50 of 1989.

Upon this discovery, a lawyer must prepare a report of the transaction or proposed transaction and give the report to the Financial Intelligence Unit as soon as possible, but no later than 2 working days after forming the suspicion.

Failure to report a financial transaction without a reasonable excuse renders the lawyer guilty of an offence punishable on conviction:

  • In the case of an individual - by a fine not exceeding VT 25 million or imprisonment for a term not exceeding 5 years, or both; or

  • In the case of a body corporate - by a fine not exceeding VT 100 million.

A suspicious transaction report must:

  1. Be in writing and may be given by way of fax or electronic mail;

  2. Contain the details specified in the Schedule to the FTRA 2000;

  3. Contain a statement of the grounds on which the lawyer holds the suspicion; and

  4. Be signed or otherwise authenticated by the lawyer.

Additionally, a lawyer who has given a suspicious transaction report to the Unit must give the Unit any further information that it has about the transaction or proposed transaction if requested to do so by the Unit.

Failure to do so will render the lawyer guilty of an offence punishable on conviction:

  • In the case of an individual - by a fine not exceeding VT 2.5 million or imprisonment for a term not exceeding 2 years, or both; or

  • In the case of a body corporate - by a fine not exceeding VT 10 million.

DOES ATTORNEY/CLIENT PRIVILEGE AND/OR DUTIES OF CONFIDENTIALITY PROVIDE A DEFENCE OR PARTIAL/TOTAL EXCEPTION TO THE REQUIREMENT TO REPORT SUSPICIOUS TRANSACTIONS?

No information available.

DOES LOCAL LAW PROVIDE ANY CRIMINAL AND/OR CIVIL INDEMNITY TO A LAWYER WHO HAS REPORTED A SUSPICIOUS TRANSACTION?

Yes. Article 7 FTRA 2000 provides complete indemnity from any civil or criminal liability for lawyers who have reported a suspicious transaction in good faith.

ONCE A SUSPICIOUS TRANSACTION REPORT HAS BEEN FILED, IS A LAWYER ALLOWED TO PROCEED WITH THE LEGAL ADVICE/TRANSACTION, AND, IF SO, MUST CONSENT FROM AUTHORITIES BE OBTAINED FIRST?

No information available.

IS THERE A TIPPING-OFF PROHIBITION? IF YES, PLEASE DESCRIBE.

Yes. Lawyers are prohibited from disclosing to any person that he has made or is about to make a suspicious transaction report to the Financial Intelligence Unit; unless he is required by statute to make the disclosure.

A breach of this prohibition renders lawyers guilty of an offence punishable on conviction:

  • In the case of an individual - by a fine not exceeding VT 25 million or imprisonment for a term not exceeding 5 years, or both; or

  • In the case of a body corporate - by a fine not exceeding VT 100 million.

DESCRIBE ANY RESTRICTIONS ON ACCEPTING A NEW CLIENT.

No information available.

ARE THERE ONGOING MONITORING REQUIREMENTS FOR EXISTING CLIENTS? IF YES, PLEASE DESCRIBE.

Law firms must keep records of every transaction it has conducted for a period of 6 years beginning on the date of the transaction’s completion. Such records must contain the following information:

  • The nature of the transaction;

  • The amount of the transaction;

  • The currency in which it was denominated;

  • The date on which the transaction was conducted; and

  • The parties to the transaction.

Failure to do so will render the law firm guilty of an offence punishable on conviction:

  • In the case of an individual - by a fine not exceeding VT 2.5 million or imprisonment for a term not exceeding 2 years, or both; or

  • In the case of a body corporate - by a fine not exceeding VT 10 million.

DESCRIBE ANY OTHER WAYS IN WHICH LAWYERS ARE AFFECTED BY ANTI-MONEY LAUNDERING LEGISLATION.

Article 8 FTRA 2000 stipulates that law firms must establish and maintain internal procedures:

  • To make the institution's officers and employees aware of the laws in Vanuatu about money laundering;

  • To make the institution's officers and employees aware of the procedures, policies and audit systems adopted by the law firm to deal with money laundering; and

  • To train the law firm's officer and employees to recognise and deal with money laundering.

These internal procedures must be contained in a written statement prepared by the law firm within 3 months of the commencement of the FTRA 2000 or, in any other case, within 3 months after the law firm starts carrying out its business.

Additionally, lawyers are subject to universal criminal law under the Proceeds of Crime Act 2002 and the Serious Offences (Confiscation of Proceeds) Act 1989 that prevents all citizens from conducting money laundering acts. Under s74A Proceeds of Crime Act NO. 30 of 2005, all incoming and outgoing passengers to and from Vanuatu carrying cash of which its value exceeds 1,000,000 VT, must make a declaration to the Department of Customs.

HAVE LAWYERS IN YOUR JURISDICTION BEEN IMPLICATED IN MONEY LAUNDERING, INCLUDING ANY TYPE OF COMPLAINT, ARREST OR PROSECUTION?

As of the on-site inspection of the AGP’s report in 2006, no lawyers have been implicated in Vanuatu.

HAS THE FINANCIAL ACTION TASK FORCE (FATF) CONDUCTED A MUTUAL EVALUATION OF THIS COUNTRY, AND, IF SO, WHAT WERE THE FINDINGS CONCERNING LAWYERS’ COMPLIANCE WITH THE FATF 40+9 RECOMMENDATIONS?

In March 2006, the AGP conducted a mutual evaluation of Vanuatu. The APG evaluation team found that Vanuatu had improved its anti-money laundering and counterterrorist financing regime since its first evaluation in 2000 by criminalising terrorist financing.

The range of entities included as a designated non-financial business and profession (DNFBPs) and their due diligence and reporting obligations were in line with the FATF’s 40+9 recommendations.

The main criticism was the lack of any detection, prosecution or conviction of money laundering activity in Vanuatu, rendering it difficult for the APG to accurately assess the effectiveness of Vanuatu’s AML system.

Some of the report’s recommendations are:

  • For the government to increase the powers of the VFIU under the FTRA 2000 to direct an entity, that has failed to comply with its obligations under the Act, to implement the obligations within such time as specified in the direction as the only sanctions available now for non-compliance of a reporting obligation are criminal and civil sanctions;

  • For the VFIU to issue guidelines to lawyers and other DNFBPs as they were not covered by the original FTRA 2000 and at the time of the on-site visit, the FIU had not developed any plans to ensure that DNFBPs were aware of their new responsibilities under the amendment; and

  • For the government to establish legislative requirements for financial institutions to have policies and procedures to address risks arising from new or developing technologies and non-face-to-face businesses in particular internet accounts.


Sources

APG Mutual Evaluation Report 2006
INCSR Country Reports 2009