Grey List Ultimatum

If Parliament fails to pass the 13 Bills, in relation to the requirements of the Financial Action Task Force (on Money Laundering) (FATF) during the First Extraordinary Session of Parliament this week, Vanuatu will be placed on the FATF’s Dark Grey List or Black List.

Prime Minister Charlot Salwai made this clear in parliament yesterday.

“This relates to the requirements of the FATF, on Vanuatu’s status on its Grey List,” said Prime minister Salwai.

“The majority of the 13 bills are priority bills which Parliament must pass, to be published in the Official Gazette, in order for them to come into effect before June 20, 2017 to avoid Vanuatu being placed on FATF’s Dark Grey List or Black List.

“On June 20, 2017 the FATF will host a plenary meeting with its member countries, to deliberate on the status of member countries who are on the Grey List, such as Vanuatu.

“I call on the cooperation and understanding of all MPs. I call on the Leader of Opposition, with his experience and knowledge on the issue to debate and approve the 13 Bills before June 16, in order for the President to give his consent and for the State Law to publish them in the Official Gazette before June 19, 2017.”

“There are 31 Bills in total which this parliament must pass to meet the FATF requirements.”

“If Parliament fails to pass the bills before the set dates, Vanuatu will be placed on the Dark Grey List or even the Black List this year.”

The prime minister said the whole country will face serious financial and economic impacts and the people will suffer from it.

“By this, I mean it can affect trade and banking relationships with foreign countries because the banks will lose their corresponding banking relationships with international banks,” he said.

“They will not be able to trade in foreign currencies, Vanuatu will lose out on the trust as a destination for investors. This situation can also affect shops, importers and it can also affect government services.

“The economy depends on services and this in turn can be affected. Its effect will be felt on imported food, such as rice and fuel.”

Consultations have been conducted internally and abroad with implementing agencies and regulatory bodies, such as the Finance Centre, said the PM.

“As such, the explanatory notes on the bills are different from the normal bills presented in parliament.

“They are very technical. But the intention of the FATF is not to remove tax haven (status) from Vanuatu.

“It is to reinforce the integrity of the system to be more transparent, with more access to information, especially information about beneficial owners of business who are involved in activities related to terrorism and money laundering, and also strengthen the role of the Financial Intelligence Unit, which has a supervisory role on anti-money laundering and counter-terrorism financing.

“Vanuatu has been placed on two Grey Lists- the FATF Grey List and the OECD Grey List.

“The bills may also be able to assist to clear Vanuatu on the OECD.

“I understand the Minister of Finance should sign the regulations before the end of this month also because the deadlines are similar.”

He reiterated that passing the 13 bills, followed by the 17 will not remove Vanuatu from the Grey List.

“It is a long process,” the Head of the Government said.

“They (the FATF) will continue to monitor us, we must implement the legislations contained in the amendments. It will take time to clear Vanuatu’s name from the Grey List.”

Leader of Opposition, MP Ishmael Kalsakau realizes the significance of the bills.

“As a former Attorney General, I also realize the importance of these bills and the urgent need for Parliament to endorse them,” said MP Kalsakau.

“It merely represents a failure by past politicians to act swiftly and advance the legislations in parliament.

“I share the concerns of PM Salwai, it is important that we work together.”

The outspoken MP also voiced concerns.

“Several weeks ago, we heard that the US president took a step back to withdraw from an international commitment, in the name of his country, to defend and put America’s interest first.

“The Prime minister says there will be no effect on our tax haven, I did not hear consultations with the private sector this is important because they are important, they are backbone and contribute in taxes, supporting the government and economy.”

He further commended the Prime minister and government on their decision not to sign PACER Plus, yet.

“The stance on PACER Plus is extremely important and a positive step for the nation,” he said.

“We appreciate there is a time for politics and a time to rise up in the name of our nation- Vanuatu.

“It is important that we do not lose sight of, even with international obligations, is our sovereignty.

“We must know what we stand to gain from our commitments with international countries.”

It was in January 2016, the FATF put Vanuatu on its Grey List, over inaction and the failure of political leaders, technical personnel and line government agencies to meet certain commitments, which the government itself had initially committed to.

“Vanuatu made the commitment in the second Mutual Evaluation in 2015,” said PM Salwai.

“In 1997, Vanuatu went through the Comprehensive Reform Program.

“There was consensus for good governance, transparency and accountability.

“At the same time, Vanuatu also committed itself to the FATF, which it recognizes and will embark on efforts to combat money laundering and terrorism financing around the world.

“We agreed to implement FATF standards, to have regular evaluations on the work we are doing to meet its requirements, on the issues of money laundering and terrorism financing.”

Unfortunately, there was not enough progress since then to help Vanuatu’s situation, in meeting the set requirements and taking the necessary steps, to ensure that anti-money laundering and our counter financing terrorism financing framework is more strong and relevant to combat money laundering in Vanuatu.

The drafting of the bills before Parliament have been subjected to numerous negotiations, between the Vanuatu Team led by the State Law Office (SLO) and consultants.

Several consultations have been undertaken, with the Regional Review Group (RRG) and the RRG was satisfied with the drafting of the legislation, which are now before parliament.

“The RRG was tasked to review Vanuatu’s performance, working with the SLO to review the bills to ensure all FATF requirements are met. All that remains is for Vanuatu to pass the bills, this week,” said PM Salwai.

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