Niue Mutual Evaluation: Low Risk, Low Readiness

Niue’s mutual evaluation characterises the jurisdiction as low risk for money laundering and terrorist financing, reflecting its microstate profile, very small domestic economy, and limited exposure to large-scale predicate crime. At the same time, the assessment highlights that low risk does not remove the need for baseline operational readiness, and it identifies several legal, supervisory, and institutional gaps that would materially constrain Niue’s ability to respond effectively if risk increases.

The country’s risk picture is shaped by an extremely small financial and DNFBP footprint and limited domestic criminal proceeds. National risk assessments (issued in 2017 and updated in 2024) maintain an overall low-risk rating, while also indicating that the assessment baseline has limitations due to scope and methodology gaps. In practice, the evaluation treats Niue’s primary vulnerability as readiness rather than current volumes of laundering.

Niue’s reporting population is exceptionally narrow. The evaluation describes three reporting entities: a development bank, an agent of an international money/value transfer service provider, and a lawyer. Niue has not had an onshore retail bank since 2013; transactional banking access is largely delivered through an agency arrangement with a New Zealand bank, meaning core transactional services are primarily subject to New Zealand’s AML/CFT framework. Remittance activity is described as low in value and mainly linked to expatriate wage remittances.

National coordination is assessed as comparatively strong for a jurisdiction of Niue’s size, supported by established security coordination structures and a newly established AML/CFT officials working arrangement. However, the evaluation identifies the absence of a risk-informed national AML/CFT policy and a formal review cycle, limiting strategic prioritisation and consistent, documented direction across agencies.

Financial intelligence capability is a key constraint. The evaluation notes that the FIU was non-operational for a prolonged period between 2020 and 2024 and resumed operations in September 2024. The FIU is described as under-resourced and needing improved IT tools for effective intake and analysis. A critical operational indicator is that the FIU has never received a suspicious transaction report from regulated entities, though it does receive border cash and cash transaction reports. The evaluation also raises an independence concern: dissemination of suspicious transaction reporting or financial intelligence is dependent on the Solicitor General’s decision on whether dissemination is appropriate.

Law enforcement outcomes reflect the low-risk environment but also demonstrate limited capability and experience for complex financial investigations. Niue Police has not investigated or prosecuted money laundering matters and has not obtained money laundering convictions. The evaluation identifies gaps in the criminalisation of money laundering that could limit the breadth of prosecution if cases arise in the future, alongside limited practical experience in investigating the financial component of proceeds-generating offending.

Confiscation and asset recovery are assessed as underdeveloped. Niue has not undertaken ML/TF-related seizures or confiscations, and the evaluation concludes there is no clear policy and limited operational measures to prioritise tracing, restraint, seizure, and confiscation. The absence of established asset management mechanisms is treated as a practical weakness should restraint or seizure become necessary.

On terrorist financing, the evaluation records no prosecutions or convictions and identifies gaps in the TF offence that may limit coverage. It also finds limited specialised capability to identify and investigate TF, and a lack of established procedures to guide TF detection, coordination, and investigation.

A central priority is targeted financial sanctions. The evaluation concludes that Niue lacks a legal and operational framework to implement TF- and PF-related targeted financial sanctions without delay. This is treated as particularly important because Niue operates an open shipping registry, and the assessment identifies proliferation-financing exposure from a sanctions perspective. The evaluation refers to concerns linked to vessels suspected of using Niue’s flag to circumvent DPRK-related sanctions and highlights weaknesses in oversight processes, escalation, and match-handling procedures.

Preventive measures show uneven application. The two financial institutions largely rely on customer due diligence and related controls applied under New Zealand standards, which are assessed as stronger than domestic arrangements. By contrast, the sole DNFBP in scope (a lawyer providing limited services) is described as not applying customer due diligence requirements under Niue’s domestic framework. The absence of STR reporting is highlighted as a systemic weakness, including in contexts where potential scam indicators were encountered.

Supervision is identified as a major gap. The evaluation finds that there had been no supervision of Niue’s reporting entities for compliance with domestic AML/CFT obligations and stresses the need for risk-based supervisory tools, guidance, and proportionate enforcement capability appropriate to the jurisdiction’s size and risk.

Transparency of legal persons and arrangements is another structural weakness. The evaluation identifies legislative deficiencies affecting beneficial ownership transparency, including the absence of systematic beneficial ownership collection and verification for legal persons and significant shortcomings for legal arrangements. These gaps constrain competent authorities’ ability to access beneficial ownership information quickly and reliably when needed.

International cooperation is assessed as broadly consistent with Niue’s context. Niue has not made or received mutual legal assistance or extradition requests related to ML/TF, but authorities do exchange information with foreign counterparts in other forms, including in support of overseas investigations.

Overall, the evaluation positions Niue as a low-risk jurisdiction with high dependence on readiness fundamentals. The priority needs are clear: establish a risk-informed national AML/CFT policy; ensure an operationally effective and appropriately independent FIU; implement targeted financial sanctions without delay, especially given shipping registry exposure; introduce credible supervision; and build a workable beneficial ownership transparency framework. The central message is that low incidence should not translate into low preparedness.

Source: Niue's measures to combat money laundering and terrorist financing