Cook Islands: Offshore Legal and Tax Regimes
Inclusion on FATF Blacklist
In common with many other offshore jurisdictions, the Cook Islands has responded to pressure from the OECD and FATF by tightening up its regulatory regime. Specifically, the Cook Islands has responded to its inclusion on the FATF blacklist of jurisdictions with weak anti-money laundering legislation. In September 2000 the Cook Islands parliament passed the Money Laundering Prevention Act, which provided for the setting up of a Money Laundering Authority, to consist of the government's financial secretary, the commissioner for offshore financial services and the commissioner of police.
In 2003 a series of nine new measures were introduced in the Cook Islands Parliament over the regulation of domestic and offshore financial industries after the cabinet approved the work of an Anti-Money Laundering/Counter Financing Terrorism Committee. The measures included a Financial Transactions Reporting Act, which required all banks to report local and international money transfers to a central financial intelligence unit. The operators of offshore companies, banks, trust accounts and insurance firms have been required to make full disclosure since June 4 2004 as a result of the new legislation.
The issue of revised FATF regulations in 2004 meant that the 2003 legislation had to be reviewed, including the Financial Transactions Reporting Act 2003, Proceeds of Crime Act 2003, Financial Transactions Reporting (Customer Identification) Regulations 2004, Financial Transactions Reporting (Offering Companies) Regulations 2004, and the International Companies (Evidence of Identity) Regulations 2004.
Following an International Monetary Fund review in 2004, various regulations relating to anti-money laundering legislation were passed.
Following a review undertaken by the Financial Supervisory Commission, amendments were also drafted to the International Trusts Act and the International Partnerships Act. The amending Bills arise from and remove the powers of the Minister of Finance to grant exemptions from those Acts and “soften” the secrecy provisions contained in them.
An IMF assessment report issued in December, 2004, was complimentary; however, the IMF made a number of detailed recommendations for the improvement of training, transparency and supervision of the financial sector.
It was decided at the FATF Plenary XVI on 11 February 2005 that the Cook Islands should be removed from the list of Non-Cooperative Countries and Territories (NCCTs). A recent FATF visit had confirmed that the jurisdiction is effectively implementing anti-money laundering measures.