Karel’s Legal Blog

The government continues to improve the system

Since the Financial Action Task Force (FATF) evaluation in 1995, Aruba has passed new legislation and undertaken a number of other measures aimed at strengthening its anti-money laundering system. In February 1996, the Reporting Ordinance and the Identification Ordinance came into effect. Following the passage of these measures, the government has sought to address concerns relating to the casino and gambling industry, the use of legal entities, the import and export of cash and the Aruba Free Zone. Reports were prepared, which make recommendations for strengthening the anti-money laundering measures in these sectors, and the necessary legislation has been drafted and is being discussed. These reports contain many valuable and innovative proposals, including improved licensing and supervision obligations, the introduction of KYC-policies, and the implementation in the non-financial sector of other mechanisms to prevent money laundering, and will considerably strengthen the anti-money laundering regime, once implemented.

The penal provisions are generally broad in scope. The money laundering offence applies to all crimes, extends to cases where the defendant should reasonably have suspected that the money was from the proceeds of the crime, and has penalties that should provide a significant disincentive. However there are two major weaknesses. First, proof of the specific predicate offence underlying the money laundering is required, which may be very difficult in many cases. Second, the offences restrict the property which can be laundered to money, securities and claims, thus excluding real or other personal property, which will cut down on the effectiveness of the offences.

The legislation dealing with confiscation appears to be broad and potentially very effective, and the issue is the practical application of the legislation. New legislation has also been introduced to substantially increase the possibilities for international mutual legal assistance.

In the financial sector, the Identification and Reporting Ordinances, combined with the Central Bank of Aruba (‘Centrale Bank van Aruba’) Directive, have provided a very sound structural basis for anti-money laundering measures in the banking sector. The unusual transaction reporting system is working reasonably successfully so far.

Internal control obligations and supervision for banks is mostly very sound. The active approach taken by Aruba has led to it being in substantial compliance with most of the FATF Forty Recommendations.

Karel Frielink
Attorney (Lawyer) / Partner

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