It is concerning that the Fa'atuatua i le Atua Samoa ua Tasi (FAST) chairman and leader La'auli Leuatea Schmidt continues to push for cryptocurrency ventures and the establishment of an Economic Free Zone in Sasina, within his constituency.

The Central Bank of Samoa along with experts from the Australian Government’s Department of Foreign Affairs and Trade (DFAT), and the International Monetary Fund (IMF) said the dangers of such an investment outweigh the benefits.

Their findings highlight the dangers of digital asset exchanges, cryptocurrency-linked investments, and loosened foreign investment controls on Samoa paving the way for organised criminal activities including human trafficking.

La’auli promised that should FAST return to power, his previously proposed economic initiatives—rejected under the current administration—would be reinstated. These include direct flights between China and Samoa, a national stock exchange, cryptocurrency ventures, and the establishment of an Economic Free Zone in Sasina, within his constituency.

You have to think about why there is a push to establish these things in Sasina despite the warning. How can such an investment be pushed for when the legal framework to protect the nation is not in place? If anything it is rather dubious and gives the impression that there are local parties who could benefit more than others.

When the direct flights from China happened in 2023, La’auli’s ‘companies’ were given exclusive rights to be the tour company for Chinese tourists and investors. Travel Focus (Hong Kong) Ltd, in its three-page media release sent to the Samoa Observer, didn't appear to be concerned with public perception and how the people would interpret the involvement of a senior cabinet minister within the Samoa Government in their business venture. In fact, the information from Travel Focus (Hong Kong) Ltd appeared too good to be true, as it gave the genesis of their partnership and even stated that it went back to 2012 with La’auli credited for his “vision” that prompted the investment.

That does beg the question that the proposal is too good to be true and constant push by the FAST leader suggests that there is much more to the deal than it meets the eye.

According to La’auli, Samoa Trade and Investment Promotion for Hong Kong and Asia Countries Limited and Oceania Blockchain Special Economic Zone Limited, aimed to introduce a digital assets exchange, stock exchange, and an investor-friendly regulatory environment in Samoa.

Valued at over SAT$2.5 billion, the project promised foreign investment, increased tourism, and a new financial hub. However, CBS has flagged multiple concerns, stating that the likely risks outweigh the potential benefits.

While the proposal includes upgrades to Samoa’s banking and payment systems, CBS insists that any changes must adhere to the Financial Action Task Force (FATF) 40 Standards on Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT).

CBS also emphasised that any banking relationships within the SEZ must involve “internationally recognised and reputable global financial institutions” to prevent exposure to financial crimes. None back the companies that have been mentioned.

CBS strongly opposes the introduction of a digital asset exchange, citing the high volatility of cryptocurrencies and their frequent use in illicit activities.

Another alarming aspect of the proposal is the planned relaxation of Samoa’s Citizenship by Investment (CBI) program. The proposal seeks to lower the investment threshold from SAT$4 million to SAT$500,000, which CBS argues would open the door to illicit investors.

Citing examples of human trafficking linked to cryptocurrency fraud, DFAT points to cases where thousands of individuals were trafficked into Myanmar, Cambodia, and Laos and coerced into running online financial scams. “INTERPOL estimates tens of thousands of people have been trafficked into scam compounds,” the report states.

The international financial system has been slow to adapt to virtual asset technologies. Considering that the first bitcoins were mined in 2009, it took the FATF nine years to establish clear anti-cryptocurrency laundering guidelines, and New Zealand 15 years to clarify how these standards apply to virtual asset service providers. There are no such laws in Samoa making it a haven for launderers and organised cyber-criminal gangs.

We are already in hot water with the European Union for not having tax legislation that has the nation blacklisted and labelled as a tax haven.

The United Nations Office on Drugs and Crimes said the use of cryptocurrencies can pose a risk of transnational organised crime activities, such as money laundering, fraud, and dark web transactions, due to their anonymous nature. Cryptocurrency can increase the anonymity of illegal transactions and could be used for underground banking. Furthermore, cybercrime offenders such as online scammers demand payment in cryptocurrency to maintain their anonymity, which could potentially be used to fund transnational organised crime organisations and pose cybersecurity risks.

This cannot be rushed into. The government was right to reject this. We are also witnessing how some people are willing to put the nation at risk for their gains.