Money laundering and other financial crimes is just as bad a problem in Fiji as anywhere else in the world. And “dirty money” circulating in Fiji’s economy has been tagged at over F$100 million, according to its Financial Intelligence Unit (FIU), the body that looks after the country’s Anti Money Laundering and Counter Financing of Terrorism (AML/CFT) efforts.
Although this is still an unofficial figure at the time of printing, Fiji FIU’s director Razim Buksh said in an interview with this magazine that this reflected that activities like money laundering and financial fraud in general were on the rise in the country.
“Global statistics estimate that some US$500 billion worth of earnings from illegal activities such as drug trafficking, prostitution, fraud and corruption are laundered worldwide each year,” said Buksh.
“There has not been any study done to ascertain just how much of such ‘dirty money’ is circulating here (Fiji) but official figures are expected to be released soon.
“It’s in the tens of millions of dollars, over F$100 million.”
While the FIU is a low profile financial intelligence agency established by the ousted Laisenia Qarase government in January 2006, it has far reaching legal powers under a piece of legislation called the Financial Transaction Act. This allows it to access the public’s financial information through Fiji’s banks, financial institutions, accountancy firms and other avenues where any financial transaction takes place such as the country’s only pension fund and foreign exchange dealers.
Buksh said this legal scope means the FIU can zero in and track a financial fraud as it is taking place, and as such, arrests can be made very early into the crime.
Prior to the setting up of FIU, Buksh said early arrests and prosecution of financial criminals were not possible as no one had the powers to access and monitor financial information nor the capacity to build up financial intelligence.
“The FTR Act imposes certain obligations on commercial banks and other financial institutions so they become our key stakeholders in terms of identifying their customers, monitoring their customers’ transactions and flagging some transactions which are unusual or suspicious,” Buksh explained.
“For example, last year, an unemployed wife of a local businessman began depositing and withdrawing approximately F$1.2 million over a seven month period. Her activities were flagged by the bank she was dealing with as ‘suspicious transactions’ and the matter was reported to us.”
The FIU’s legal powers to access all registries in the country as well as information from other government agencies like the tax and immigration departments allowed it to build up solid intelligence on the case, hand the information over to the relevant authorities who then move in on those involved.
On average since 2005, the FIU receives at least one such “suspicious transaction report” (STRs) every second day.
In its 2007 annual report, it recorded 268 STRs that year valued at $26.3 million, 215 STRs in 2006 valued at F$65.8 million and 280 STRs in 2005 valued at F$28.1 million.
Between 2000 when the STR framework was first established to the end of 2007, the FIU had received 1628 STRs with a total transaction value of F$200 million. According to Buksh, in 2008 up to November, some 400 STRs with a total value of F$100 million were reported to FIU, half the value of cases reported in the last seven years.
Buksh cautioned this must not be taken to reflect the size of money laundering activities happening in Fiji as some STRs are later verified as legitimate transactions.
But the trend of activities however have evolved, he confirmed, with cyber crimes at the forefront of emerging problems in Fiji and “the real estate sector increasingly being used to channel proceeds of crime.”
The highlight of continuing trend was the large number of tax evasion cases detected in the country each year.
Severe penalties: The work of Fiji’s FIU has been boosted by government support in terms of strengthening its role through a raft of legislations, underscoring the importance of this entity in tracking as well as preventing financial crimes in the country, which in turn lessens the chances of Fiji’s financial system being used to hide funds later used to finance terrorist activities.
In 2007, the Fiji cabinet further strengthened the FTR Act by approving the implementation of three key reporting provisions.
This obligated the reporting to FIU of all cash transactions over F$10,000, all electronic funds transfer transactions as well as a new border currency requirement that obliges individuals leaving or arriving in Fiji to declare the possession of F$10,000 (or equivalent in other currencies), failure of which can expose an individual to very severe penalties.
Buksh said the FIU, in association with relevant international authorities, continues to work on areas that will further strengthen Fiji’s AML/CFT framework and to bring it into compliance with global AML standards.
