U.S. Dep't of State, 2025 Trafficking in Persons Report: Palau

PALAU (Tier 2) The Government of Palau does not fully meet the minimum standards for the elimination of trafficking but is making significant efforts to do so. The government demonstrated overall increasing efforts compared with the previous reporting period; therefore, Palau remained on Tier 2. These efforts included increasing trafficking investigations, developing a questionnaire for labor compliance officers to identify potential victims, increasing funding for victim assistance, and implementing a system to strengthen the ability of officials to identify fraudulent transactions linked to crime, including trafficking. However, the government did not meet the minimum standards in several key areas.

The government identified fewer victims and did not initiate any trafficking prosecutions, convict any traffickers, or conduct educational or public awareness campaigns for labor recruiters. The government did not prohibit agencies from charging workers recruitment fees, nor did it have a formal recruitment mechanism or official visa pre-approval process for foreign workers, making it difficult to assess whether fraudulent recruitment took place. PRIORITIZED RECOMMENDATIONS: Increase efforts to investigate and prosecute trafficking crimes, and seek adequate penalties for convicted traffickers, including complicit officials, which should involve significant prison terms. Ensure officials use the established SOPs and proactively identify victims by screening for trafficking indicators among vulnerable populations, including individuals involved in commercial sex and migrant workers.

Dedicate sufficient financial and human resources to the Anti-Human Trafficking Unit (AHTU) and the Office of Labor Compliance. Develop and consistently enforce strong regulations and oversight of labor recruitment companies and agents, including by eliminating worker-paid recruitment fees, establishing a formal recruitment mechanism, and holding fraudulent labor recruiters criminally accountable. Amend the work permit system to allow non-resident workers facing exploitation to change employers. Increase the availability of protection services – including short-term shelter, long-term housing, counseling, and medical care – for all trafficking victims, including by collaborating with civil society service providers.

Expand efforts to raise awareness on all forms of human trafficking, particularly among employers, labor recruiters, and vulnerable populations, including individuals in commercial sex and migrant workers. Implement a systemic victim-witness assistance program to increase protective services for victims participating in the criminal justice process and train law enforcement and judicial officials to use victim-centered approaches during investigations and court proceedings. Provide anti-trafficking training or guidance for diplomatic personnel to prevent their engagement in or facilitation of trafficking crimes and to increase their capacity to identify and assist Palauan victims abroad. Undertake and make publicly accessible research on human trafficking in the country, including trafficking involving Palauans and the fishing industry, and utilize research findings to create an evidence base for future policy decisions.

PROSECUTION

The government maintained law enforcement efforts. The government criminalized sex trafficking and labor trafficking under the 2023 Anti-People Smuggling and Trafficking Act, which amended the penal code. Sections 2106 and 2110 of the penal code criminalized sex trafficking and labor trafficking involving adult victims and prescribed penalties of between one and 25 years’ imprisonment and a fine of up to $125,000. Sections 2108 and 2111 criminalized sex trafficking and labor trafficking involving child victims and prescribed penalties of between two and 25 years’ imprisonment and a fine of up to $250,000.

These penalties were sufficiently stringent and, with respect to sex trafficking, commensurate with penalties prescribed for other grave crimes, such as rape. The government initiated 13 investigations (one for sex trafficking and 12 for forced labor), compared with initiating 12 investigations (one for sex trafficking and 11 for labor trafficking) in the previous reporting period. Authorities determined six cases did not meet trafficking standards or lacked sufficient evidence and proceeded with either closing the case or investigating non-trafficking related charges; six forced labor cases and one sex trafficking case remained under investigation. The government continued one forced labor investigation initiated in a prior reporting period.

The government did not prosecute or convict any traffickers for the second consecutive year. The government did not report any investigations, prosecutions, or convictions of government employees complicit in human trafficking crimes; however, corruption and official complicity in trafficking crimes remained significant concerns, inhibiting law enforcement action during the year. The Ministry of Justice’s AHTU was the lead agency for trafficking investigations and received a dedicated budget from the national congress; however, the limited budget and manpower (three investigating officers and one victim’s advocate) reportedly resulted in inadequate resources, particularly for victim support and outreach coordination, and hindered authorities’ ability to investigate trafficking cases throughout the country. The government reported cooperating with a foreign counterpart in anti-trafficking law enforcement activities.

The government reported limited investigative and prosecutorial capacity, coupled with a redirection of judicial resources to combat an increasing drug epidemic, contributed to the lack of prosecuted cases. The government, in partnership with civil society and a foreign government, trained first responders and service providers, including law enforcement officials, labor inspectors, and health care workers, on various anti-trafficking topics, including victim identification, referral SOPs, and the trauma-informed approach.

PROTECTION

The government maintained efforts to identify and protect victims. The government identified two trafficking victims (one woman forced labor victim and one girl sex trafficking victim), compared with identifying 11 forced labor victims (four women and seven men) in the previous reporting period. Both identified victims were foreign nationals. A labor inspector identified one victim, and a customs official identified the second.

The AHTU was responsible for granting official victim status, which enabled victims to access government provided and funded victim services; stakeholders referred victims to the AHTU for further screening after identifying potential victims by following SOPs. Authorities also used a guide designed to assist in and avoid re-traumatizing trafficking victims during interviews. The government developed a questionnaire, in line with existing SOPs, for labor compliance officers to identify potential trafficking victims. The government referred both identified victims to government-provided or government-funded services; services provided included lodging accommodations, psychological and medical care, legal support, translation, and repatriation.

The government, in partnership with community-based organizations, could provide medical treatment, counseling, temporary job placement, temporary accommodation, interpretation, transportation, repatriation assistance, and provisions of basic necessities to trafficking victims. The government increased the amount allocated to its small monetary funding for victim assistance. However, the AHTU did not have a dedicated budget for victim assistance. Foreign victims were entitled to the same benefits as Palauan victims.

The adult victim was granted a work permit, and the Office of Labor Compliance provided the victim with temporary work placement. The government continued to fund the Office of the Public Defender and an NGO to assist trafficking victims with legal counseling and representation; however, the government did not refer any victims for legal assistance. The government, in partnership with a foreign government, continued work to construct a national shelter for victims of crime, including trafficking. The lack of longer-term support services and fear of reprisal from employers reportedly led some victims to leave the country rather than pursue legal recourse.

The government reported the lack of sufficient funding dedicated to victim protection services and the lack of a government shelter hindered its ability to protect trafficking victims. The government did not require victim participation in trafficking investigations or prosecutions in order to receive protection services; authorities reported two victims participated voluntarily. The government allowed victims to provide written or video-recorded testimonies; however, these were not allowed during trials. The government provided an alternative option for trafficking victims to speak with the AHTU victim advocate rather than law enforcement officials during the investigation process.

Victims were provided with a reflection period to make a decision regarding their participation in an investigation or trial; however, the reflection period did not guarantee shelter accommodation. The Office of Victims of Crime Advocacy (VOCA), within the Ministry of Health and Human Services, could also provide support and liaise with investigators, on behalf of victims of serious crime, including human trafficking, to negotiate a victim’s participation in an investigation. The VOCA and AHTU victim advocate coordinated to provide assistance to trafficking victims. The government could offer ad hoc, short-term legal alternatives to foreign victims’ removal to countries where they might face hardship or retribution.

The attorney general or the special prosecutor on the case could designate victims as “vulnerable,” making them eligible for alternate employment and accommodation assistance; the government did not report using these options. Courts could order convicted traffickers to pay restitution to trafficking victims but did not do so in practice because there were no convicted traffickers.

PREVENTION

The government slightly increased efforts to prevent trafficking. The AHTU coordinated national efforts to combat human trafficking. The AHTU also led implementation of the 2022-2025 NAP, collected data, and conducted awareness-raising activities. An interagency Anti-Human Trafficking Working Group (Working Group), which included representatives from government and nongovernment agencies, met quarterly and coordinated efforts to share information on human trafficking cases, identify systemic issues, and harmonize government policies.

The government allocated a small amount of monetary funding and provided in-kind resources, including logistical support and dedicated personnel, to the implementation of the NAP. The government reported allocating a small amount of monetary funding for awareness raising activities. The government conducted awareness campaigns, mainly targeting public officials and students; unlike during the previous reporting period, these campaigns did not target foreign worker communities, which were vulnerable to trafficking. The government translated awareness materials into Mandarin, Bengali, Tagalog, and Palauan.

The government did not conduct educational or public awareness campaigns for labor recruiters. The government reported participating in international forums in foreign countries to raise awareness on trafficking trends. The government participated in research conducted by an international organization to identify trends related to human trafficking in the region. The government lacked a formal labor recruitment mechanism, a pre-approval visa process, and minimum wage requirements for agricultural and domestic service workers, which increased the risks for forced labor.

Observers reported that the absence of formal recruitment and official visa pre-approval processes for foreign workers, which meant the government did not have a screening mechanism to assess the legitimacy of required documents, made it difficult to assess whether fraudulent recruitment took place. However, in an effort to reduce trafficking vulnerabilities in at risk sectors, the President issued a directive in December 2024 that gave the National Security Coordinator authority to review and approve visa, non-resident work permit, and foreign investment applications for 90 days, adding an additional vetting process to prevent individuals working without proper permits, reducing the risks of forced labor among foreign workers. The government did not prohibit worker-paid recruitment fees. The Bureau of Customs and Border Protection began implementing a system to streamline financial transactions with customs-related costs and fees, which would strengthen the ability of officials to identify fraudulent transactions linked to crime, including trafficking.

The government reported providing anti-trafficking training material to all its embassies for its diplomatic personnel; however, it did not mandate these trainings. The government prohibited foreign workers, including those experiencing labor exploitation, from working for another employer in Palau for five years after the worker departed Palau; this rule potentially deterred victims from reporting abuse, and observers previously criticized it gave the current employer leverage over foreign workers and their ability to work again in Palau after their current contract expired. The AHTU staffed a 24-hour trafficking hotline with the VOCA and on-call AHTU lead investigators who spoke Palauan and English; the government reported five calls were made to the hotline, which led to the identification of one victim. The Office of Labor Compliance operated a dedicated 24-hour hotline for workers with concerns about their employment situation; the government did not report any calls to the labor hotline resulted in trafficking investigations.

The government did not make efforts to reduce the demand for commercial sex acts. TRAFFICKING PROFILE: Trafficking affects all communities. This section summarizes government and civil society reporting on the nature and scope of trafficking over the past five years. Human traffickers exploit domestic and foreign victims in Palau, and traffickers exploit victims from Palau abroad.

According to an NGO, only one-third of male respondents to a 2023 survey believed trafficking took place in Palau. In addition, according to the government, approximately one-third of respondents to another 2023 survey were unaware of the existence of a national law to protect trafficking victims, and approximately 20 percent of respondents did not believe trafficking took place in Palau. Traffickers exploit Palauan girls in sex trafficking, primarily in the states of Koror and Airai. Palau’s foreign population, about one-third of the country’s population of 18,000, is especially at risk for trafficking.

Undocumented immigrants and migrant workers with low levels of education and English-language proficiency have an increased vulnerability to trafficking. Filipino, Bangladeshi, Nepali, Thai, Vietnamese, South Korean, and Chinese national adults pay thousands of dollars in recruitment fees, sometimes up to $8,000, and willingly migrate to Palau for jobs in domestic service, agriculture, the hospitality industry, or construction. Upon arrival, traffickers exploit some in conditions substantially different from what had been presented in contracts or recruitment offers, and these workers are subsequently exploited in trafficking. Traffickers target victims on social media and messaging applications and exploit them for labor trafficking in construction, domestic work, and the food and beverage industry.

Traffickers exploit Chinese nationals in labor trafficking in illegal online gambling operations. Traffickers exploit foreign workers and Palauans in forced labor on fishing boats in Palauan waters. Male trafficking victims have been exploited in forced labor in the construction, agricultural, fishing, and service industries. Public support for loose foreign worker policies to increase the supply of low-cost foreign labor poses a challenge to combat human trafficking.

Foreign migrant workers who travel under tourist visas to Palau and, upon arrival, are instructed by recruiters to change their visa status for employment are vulnerable to trafficking. Traffickers exploit foreign workers, predominantly from Southeast Asia, in sex trafficking in the hospitality industry, including restaurants, bars, massage parlors, retail stores, and hotels. Women from the Philippines and China are recruited to work in Palau as waitresses or clerks, but traffickers exploit some in sex trafficking in karaoke bars or massage parlors. Displacement and loss of livelihood as a result of typhoons significantly increases Palauans’ vulnerability to trafficking.

Limited reports indicated some Palauans searching for work in the United States experience indicators of trafficking, such as excessive work hours and withholding of wages. Official complicity continues to facilitate trafficking in Palau. Authorities investigated government officials – including labor, immigration, law enforcement, and elected officials – for complicity in trafficking crimes in previous years. Chinese organized criminal groups are connected to suspected human trafficking and official complicity and may be involved in forced criminality inside facilities where scam operations take place.

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