Key Takeaways
- FATF standards reach Vanuatu through mutual evaluations conducted by the Asia/Pacific Group on Money Laundering.
- Assessment covers two dimensions: technical compliance with the 40 Recommendations and effectiveness measured against the Immediate Outcomes.
- Vanuatu's AML/CFT framework relies on its Financial Intelligence Unit and supervisory bodies to apply and enforce the rules.
- Non-resident owners and advisers should track follow-up reviews and remediation progress, since findings affect due diligence expectations.
FATF and Vanuatu: Why a Global AML Watchdog Shapes a Pacific Jurisdiction
The Financial Action Task Force (FATF) sets the international standards against money laundering and terrorism financing, and its findings on FATF in Vanuatu carry weight far beyond the South Pacific. Vanuatu is not on the FATF grey list, having exited the monitoring process in June 2018, yet its standing still matters to anyone holding or banking a Vanuatu entity, because a separate European Union list continues to flag the jurisdiction. Assessment is handled regionally by the Asia/Pacific Group on Money Laundering (APG), with the FATF country page recording the underlying evaluation work.
This article explains how Vanuatu came to be listed and delisted, where it stands against the 40 Recommendations, and what its current status means in practice. It is most relevant to non-resident owners, investors, and advisers weighing the banking and due-diligence consequences of a Vanuatu presence.
What the Financial Action Task Force Does and How It Assesses Countries
FATF names jurisdictions with weak anti-money-laundering and counter-terrorism-financing controls in two public documents, commonly called the black and grey lists, updated three times a year. A country's place on those lists turns on how it performs in a peer review.
Two dimensions are measured: technical compliance and effectiveness. Technical compliance asks whether the 40 FATF Recommendations are written into a country's laws, regulations, and other legal instruments; effectiveness asks whether the system actually works against the risks the country faces.
Effectiveness is judged across 11 areas known as Immediate Outcomes, and the FATF treats it as the more important of the two. For members of the APG, the review takes the form of a peer mutual evaluation that produces a detailed report and targeted recommendations.
A new evaluation cycle began in 2024. FATF launched its 5th round under the 2022 Methodology, and regional bodies such as the APG follow with their own next-round evaluations once prior rounds close.
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Vanuatu's Mutual Evaluation History with the Asia/Pacific Group on Money Laundering
Vanuatu was a founding member of the APG in 1997, an inter-governmental body that now spans 41 member jurisdictions. Membership brought periodic on-site review, with visits in 2005 and 2015, each followed by findings that the country had to correct.
The third-round assessment rested on an on-site visit conducted from 26 January to 7 February 2015, and the resulting Mutual Evaluation Report was adopted in July 2015. The APG then issued a public statement and referred the matter to the FATF International Cooperation Review Group.
| Date | Event |
|---|---|
| October 2015 | APG referral to the FATF ICRG |
| February 2016 | Placed on the FATF grey list; first high-level political commitment |
| January 2017 | Second high-level commitment; eight-point action plan |
| February 2018 | ICRG finds the action plan substantially complete |
| May 2018 | ICRG on-site visit |
| June 2018 | Removed from the FATF monitoring process |
The action plan adopted in 2016 and 2017 identified eight strategic deficiencies that the government, through the Prime Minister, committed to resolve. By June 2018 the FATF recognised significant progress and lifted the country from grey-list monitoring.
The story does not end at delisting. In 2024 Vanuatu volunteered for an expedited APG mutual evaluation set for 2026, a step its government frames as continuous improvement rather than obligation.
How Vanuatu Measures Against the FATF 40 Recommendations
At the time of the 2015 report, the country had improved on its 2006 assessment, but most of the 40 Recommendations still sat at non-compliant or partially compliant. Weaknesses ran across preventive measures, supervision of financial institutions and designated non-financial businesses, law enforcement powers, statistics, sanctions, and international cooperation.
The remediation that followed was substantial. It produced an AML/CTF National Coordinating Committee and two working groups, signed memoranda of understanding between those members, and 30 AML/CTF-related bills passed through Parliament.
That work showed in the 2018 follow-up, which delivered 27 re-ratings. Sixteen Recommendations rose to Compliant and a further band moved to Largely Compliant, leaving only one at Partially Compliant.
A government statement attributed to the Prime Minister, made in late 2024, puts the firm at 39 of 40 Recommendations met. That figure reflects self-reporting; no official APG re-rating document confirming the upgrade of the final Recommendation has been published.
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Technical Compliance Ratings: Where Vanuatu Stands
The contrast across three reference points tells the clearest story.
| Status | 2015 MER | 2018 Follow-Up | 2024 statement |
|---|---|---|---|
| Non-Compliant | 13 | 0 | 0 |
| Partially Compliant | (remainder) | 1 (R.19) | implied 0 |
| Largely Compliant | - | 23 | - |
| Compliant | - | 16 | 39 of 40 met |
The single outstanding item after 2018 was Recommendation 19, which concerns higher-risk countries. The 2024 government position implies it too has been addressed, though that rests on self-reporting rather than a formal APG re-rating.
One independent scoring model, applied to the 2015 data, ranked the jurisdiction sixth out of more than 70 countries on technical compliance, at roughly 81 percent. The same model rated it last on effectiveness, a split that frames the section below.
Effectiveness Ratings and the Immediate Outcomes for Vanuatu
Technical strength on paper did not translate into a working system in 2015. The country received the lowest possible rating across all 11 Immediate Outcomes, a result the assessors tied to missing policy priorities and thin training and resources.
One finding stands out for a foreign owner reading the risk picture. Although money laundering had been a criminal offence since 2002, there had been no money-laundering investigations or prosecutions; authorities pursued only the underlying predicate crimes such as fraud, drugs, and tax offences.
The 2018 follow-up upgraded technical compliance but left all 11 effectiveness measures at their 2015 "low" marks. The 2026 APG mutual evaluation is the next scheduled chance for a formal effectiveness re-assessment.
Government preparation for 2026 is aimed squarely at this gap, with stated effort directed at improving outcomes across all 11 areas.
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Vanuatu's AML/CFT Legal and Institutional Framework
The backbone of the regime is the Anti-Money Laundering and Counter-Terrorism Financing Act No. 13 of 2014, brought into force on 24 June 2014. It replaced the older Financial Transaction Reporting Act, classifies reporting entities, and sets the preventive duties those entities must follow.
Supporting regulations spell out customer due diligence in detail, the documents accepted as evidence of identity, and the templates used for reporting. A wave of 30 statutes approved by Parliament in June and November 2017 brought the wider framework into line with the action plan and the 40 Recommendations.
Several pieces matter directly to a non-resident structure:
- Terrorism financing. The Counter Terrorism and Transnational Organised Crime (Amendment) Act No. 15 of 2017, in force from June 2017, criminalises the financing of terrorist acts, organisations, and foreign terrorist fighters.
- Beneficial ownership. Amendments to the International Companies Act in 2016 and 2017 removed the old secrecy provision; company records are confidential but disclosable to competent authorities, supervisors, and law enforcement.
- Virtual assets. A Virtual Asset Service Providers Act of 2024 requires VASPs to license with the Vanuatu Financial Services Commission and to meet AML and KYC obligations.
A National AML/CTF/CPF Strategy, endorsed by the National Coordinating Committee on 19 August 2025, sets the domestic roadmap toward the 2026 review.
The Vanuatu Financial Intelligence Unit and Supervisory Bodies
Supervision is shared among a small set of named bodies, each with a defined role.
| Body | Role |
|---|---|
| Financial Intelligence Unit (VFIU) | National reporting and analysis; enforcement powers under s.50A of the AML&CTF Act |
| Financial Services Commission (VFSC) | Regulates non-bank financial services; supervises company and trust service providers, securities dealers, and VASPs |
| National Coordinating Committee (NCC) | Government body overseeing AML/CTF policy, established 23 October 2015 |
| Reserve Bank of Vanuatu | Member of the Supervisory Working Group |
The NCC operates through two working groups formed in December 2016. The Supervisory Working Group brings together the Reserve Bank, the VFSC, the VFIU, the Casino Regulator, and the Cooperative Registrar; the Law Enforcement Working Group draws in Police, Immigration, Customs, the VFIU, Public Prosecution, and Biosecurity.
For a foreign-owned company, the Commission is the most likely point of contact, since it supervises the corporate and trust service providers that administer such entities. Reporting and intelligence flow through the VFIU, whose work is documented at its official portal.
What FATF Findings Mean for a Non-Resident Owner or Adviser
Here the two lists diverge, and the distinction is the single most useful thing for a foreign owner to grasp.
On the FATF side the position is favourable. As of 13 February 2026 the grey list did not include Vanuatu; it has been absent from that list since June 2018.
The European Union maintains its own roster of high-risk third countries, and there the jurisdiction remains listed. The most recent EU list rests on Delegated Regulations (EU) 2026/46 and (EU) 2026/83, published in January 2026, and the EU's methodology has diverged from the FATF timeline since July 2018.
EU-regulated banks, lawyers, and accountants must apply enhanced due diligence to any business relationship or transaction with a Vanuatu nexus. Expect heavier onboarding, higher cost, and a real risk of account de-risking or correspondent banking refusals.
The government's counter-argument is that the country carries a low risk profile, with little organised financial crime, no large-scale laundering, and negligible weight in global illicit flows. It also warns that broad standards drive financial exclusion, a point that explains why correspondent banking access is the practical pressure point for owners here. The European Commission sets out its approach on its AML international page.
Follow-Up Reviews, Remediation Progress, and the Road Ahead
The 2018 follow-up recorded very significant progress, and the FATF cited that progress when it removed the country from the grey list in June 2018. The APG agreed to keep monitoring the regime on an ongoing basis.
Preparation for the 2026 mutual evaluation is the active workstream. The National Coordinating Committee leads it, working with the APG and development partners that include Australia, New Zealand, the United Kingdom, the United States, the Asian Development Bank, the World Bank Group, and the United Nations.
An APG high-level preparatory visit reached Port Vila in August 2024. With all 11 Immediate Outcomes still at their 2015 low ratings, the 2026 effort centres on effectiveness rather than the laws on the books.
No timeline has been published for removal from the EU list. The Commission added the jurisdiction in 2016 around the time of the grey listing and continues to follow its own methodology, so EU delisting may lag any positive 2026 result.
Conclusion
Vanuatu cleared the FATF grey list in 2018 and has stayed off it, and on paper its compliance with the 40 Recommendations is strong. The live constraint for a non-resident owner is not the FATF list but the EU one, which still triggers enhanced due diligence and can complicate banking. The 2026 APG evaluation is the next event to watch, since it targets the effectiveness gap that the listing concerns. Until then, factor heavier onboarding and possible correspondent-banking friction into any decision involving a Vanuatu entity.
How Expanship Can Help Your Business in Vanuatu
Expanship helps foreign owners work through the practical consequences of Vanuatu's AML standing, from beneficial-ownership disclosure and customer due diligence to the enhanced checks EU intermediaries apply to a Vanuatu nexus, alongside the full set of services a non-resident entity needs.
- Company formation and structuring for non-resident owners
- Registered agent and registered office services
- Tax registration and routine filing
- Ongoing AML and regulatory compliance management
- Accounting and bookkeeping support
- Introductions to banking and payment providers
To discuss your situation, contact Expanship Vanuatu.
Frequently Asked Questions
No. Vanuatu was removed from the FATF monitoring process in June 2018 and was not on the grey list as of 13 February 2026. It had been listed in February 2016 following an APG referral.
The European Union keeps a separate list of high-risk third countries that includes Vanuatu, based on Delegated Regulations published in January 2026. EU-regulated banks and professionals must apply enhanced due diligence to any Vanuatu-linked relationship, which is what drives the extra scrutiny.
The 2018 follow-up left zero Non-Compliant ratings, with 16 Compliant, 23 Largely Compliant, and one Partially Compliant. The government has since stated that the country meets 39 of 40 Recommendations, though that reflects self-reporting rather than a published APG re-rating.
Technical compliance measures whether the Recommendations are written into law, while effectiveness measures whether the system works in practice across 11 Immediate Outcomes. Vanuatu rates well on the former but received the lowest effectiveness ratings in 2015, and those have not been formally re-rated since.
The Financial Services Commission supervises company and trust service providers, securities dealers, and virtual asset providers, while the Financial Intelligence Unit handles reporting and analysis. Both sit within the National Coordinating Committee, established on 23 October 2015.
Vanuatu volunteered for an expedited mutual evaluation in 2026, with preparation led by the National Coordinating Committee and supported by international partners. The focus is on improving effectiveness across all 11 Immediate Outcomes, which is the area that remains at its 2015 ratings.
Legal Disclaimer
The information provided in this article is for general informational purposes only and does not constitute legal, tax, or professional advice. While we strive to ensure the accuracy and timeliness of the content, laws and regulations are subject to change, and the application of laws can vary widely based on specific facts and circumstances.
Readers should not act upon this information without seeking professional counsel tailored to their individual situation. Expanship and its authors disclaim any liability for actions taken or not taken based on the content of this article.
For specific advice regarding your business setup, compliance requirements, or any legal matters, please consult with qualified legal and tax professionals in the relevant jurisdiction.
