Pacific Private Sector Development Initiative warns Solomon Islands risks slipping to FATF non-compliance on beneficial ownership without reforms.
Solomon Islands faces a risk of slipping to non-compliance with global beneficial ownership standards unless reforms are implemented, according to a new report published today by the Asian Development Bank’s (ADB) Pacific Private Sector Development Initiative (PSDI).
Enhancing Beneficial Ownership Transparency in the Pacific: An Overview of Pacific Countries’ Compliance with FATF Recommendation 24 assesses each Pacific developing member country’s compliance with FATF Recommendation 24, which sets out requirements to collect and disclose beneficial ownership information for companies and other legal persons. The report also provides country-specific recommendations for reform to enhance compliance and avoid being placed on the FATF gray list.
“Complying with international beneficial ownership standards is essential for countries that rely on international banks to connect to global financial markets, as do many Pacific countries,” said the report’s author, PSDI’s International Business Law Expert, Terry Reid. “Strong compliance helps ensure businesses can maintain access to banking services, keep borrowing costs affordable, and safeguards investor confidence.”
Solomon Islands was rated partially compliant with Recommendation 24 in its 2019 Mutual Evaluation Report. PSDI’s report identifies a risk of slipping to non-compliant under the FATF’s updated standards due to legislative gaps, poor enforcement, and an outdated company registry. If found non-compliant, Solomon Islands risks losing links to international financial systems and foreign investment.
“Solomon Islands faces significant challenges in meeting FATF standards,” said Mr. Reid. “Unless reforms are undertaken to improve compliance with FATF Recommendation 24 and reduce the risk of misuse of legal persons, Solomon Islands is at risk of slipping to non-compliance.”
The report recommends implementing legislative changes to require the collection and maintenance of beneficial ownership information for Solomon Islands’ main types of business entities, upgrading the current online registry system, and enhancing the penalties for non-compliance.
The report draws on Asia/Pacific Group on Money Laundering Mutual Evaluation Reports and insights gained from PSDI through its extensive work in the Pacific.
PSDI is an ADB technical assistance program undertaken in partnership with the governments of Australia and New Zealand. It supports the ADB’s 14 Pacific developing member countries to improve the enabling environment for business and to achieve inclusive, private sector-led economic growth.
Source: Pacific Private Sector Development Initiative- Asian Development Bank
