A recent evaluation report by the Asia Pacific Group on Money Laundering (APG) has warned that the Maldives faces a significant risk of becoming a hub for circulating "black money" derived from illegal trade.
The report attributes this vulnerability to the country's strategic geographic location combined with a persistent failure to effectively implement existing laws and regulations.
Released yesterday, the report assesses the effectiveness of the Maldivian framework in combating money laundering and the financing of terrorism.
According to the APG, the most significant obstacle to a functional system is the undue influence and power wielded by political figures in the decision-making process. This political interference has led to several systemic loopholes, rendering the Anti-Money Laundering and Counter-Terrorism Financing acts largely ineffective despite their presence in the legal books.
The report further highlights that the Maldivian economy remains heavily dependent on cash transactions, a factor that creates an environment conducive to money laundering and terrorist financing.
Additionally, the APG expressed concern over the thriving "black market" for foreign currency. While official exchange rates exist, authorities have reportedly failed to take adequate measures to enforce them or curb illegal dollar trading, allowing these unregulated markets to persist.
The real estate sector was also flagged as a major area of concern, with the report noting that the regulatory framework has not evolved to prevent laundering activities within the industry. The APG emphasized the urgent need to strengthen licensing procedures for real estate developers and agents. Findings indicate that the vast majority of illicit funds in the Maldives are generated through drug trafficking, corruption, and organized crime.
Data from the report reveals a stark gap between investigations and convictions. Between 2019 and 2024, authorities initiated 158 money laundering investigations, yet only four cases reached a verdict in court. Of those four, only a single conviction has remained finalized without being subject to appeal.
Furthermore, while the Maldives conducted a risk assessment in 2022, the APG noted that updated findings have not been shared, prompting the organization to call for immediate corrective measures.
The Maldives has been a member of the APG since July 2008, joining a global network that includes major economies such as the United States, China, India, and Australia.
