The Marshall Islands Corporate Registry released a compliance update on March 5, 2020 wherein it summarized certain key developments relating to Organisation for Economic Cooperation and Development (“OECD”) evaluations, Financial Action Task Force (“FATF”) evaluations, and updates on removal of the Republic of the Marshall Islands from blacklists by the European Union and France. These compliance developments are summarized in more detail below.
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT (OECD)
The Republic of the Marshall Islands (RMI) received a rating of “largely compliant” on 12 November 2019 following its second round review against the 2016 Terms of Reference, which analyzed the implementation of the international standard of transparency and exchange of information on request. Panama’s second round review was adopted at the same time, and they received a rating of “partially compliant.” Importantly, Liberia has not yet had its report adopted as it has not been evaluated by the OECD against the standards since 2012. Liberia received a pass during the last OECD evaluations because the country fell below the poverty index and faced challenges from an Ebola outbreak. Liberia’s report was discussed during the Peer Review Group Meeting, 25-28 February 2020, and Liberia’s report will be formally adopted shortly.
FINANCIAL ACTION TASK FORCE (FATF)
The RMI was put on regular follow-up following its 2011 evaluation. For reference, regular follow-up is the highest rating achievable. It will undergo its next evaluation in the fourth quarter of 2020, with its report to be adopted in 2021. Several countries have already been evaluated under the new standards, and a number of those jurisdictions were evaluated as having strategic deficiencies regarding anti-money laundering activities and in combatting the financing of terrorism. Both the Bahamas and Panama have been listed as jurisdictions with strategic deficiencies.
EUROPEAN UNION (EU)
The RMI is currently whitelisted by the EU after being removed from the EU blacklist of non-cooperative jurisdictions for tax purposes on 14 November 2019. This is due in part to the economic substance regulations that the RMI implemented. It is important to note that Liberia has not yet been evaluated by the EU. When Liberia is evaluated, it will be held to the same standards and will also be required to implement economic substance regulations before it is evaluated to be in compliance with EU standards. Panama was placed on the EU blacklist on 18 February 2020.
The RMI was removed from the French tax haven blacklist on 7 January 2020. Importantly, Panama remains on the blacklist, and the Bahamas and the British Virgin Islands have now been added to the blacklist.