Overview:
Palau has spent much of the past two decades at Tier 2 in the U.S. human trafficking rankings. The latest report recognizes progress in identifying victims and providing assistance, but no traffickers were prosecuted or convicted for the third consecutive year. What needs to change to better protect Palau’s workers and trafficking victims?
By L.N. Reklai
KOROR, Palau (Oct. 15, 2026) — Palau remains on Tier 2 in the U.S. Department of State’s 2026 Trafficking in Persons Report, a ranking it has held for much of the past two decades, as the government continues to struggle to prosecute traffickers, protect victims and close gaps in laws governing foreign workers.
The report recognizes that Palau has increased efforts to fight human trafficking, including identifying more victims, providing temporary work permits to victims and investigating a law enforcement officer suspected of involvement in trafficking crimes.
However, the report also points to major shortcomings. For the third consecutive year, Palau did not prosecute or convict any traffickers. The government also lacks a shelter available to trafficking victims and has not prohibited employers or recruitment agencies from charging workers recruitment fees.
Palau has been ranked Tier 2 in U.S. trafficking reports since at least 2009, although it was placed on the Tier 2 Watch List in 2021 and 2022 before returning to Tier 2 in 2023. The ranking means the government does not fully meet the minimum standards for eliminating human trafficking but is making significant efforts to meet them.
The 2026 report says the government demonstrated overall increasing efforts compared with the previous reporting period, allowing Palau to remain on Tier 2 rather than face a lower ranking.
Investigations continue, but prosecutions remain a concern
Palau initiated seven human trafficking investigations during the reporting period: one involving sex trafficking and six involving forced labor. That was down from 13 investigations in the previous reporting period.
Authorities determined that four potential forced labor cases did not meet the legal definition of trafficking or lacked sufficient evidence. Another case was closed after the suspect was deported. Three forced labor investigations from earlier reporting periods remained open.
The report identified inadequate resources, victims’ fear of retaliation and mistrust of authorities as barriers to effective investigations.
It also raised concerns about possible official involvement in trafficking. The government investigated one law enforcement officer for alleged complicity in trafficking crimes and suspended the officer without pay. The report said corruption and official complicity continued to be significant concerns that hindered law enforcement efforts.
Palau has laws criminalizing sex trafficking and labor trafficking. Under the 2023 Anti-People Smuggling and Trafficking Act, adults’ trafficking cases carry penalties of one to 25 years in prison and fines of up to $125,000. Cases involving child victims carry penalties of two to 25 years in prison and fines of up to $250,000.
Despite these laws, the absence of prosecutions and convictions remains one of the clearest signs of the gap between having legal protections and enforcing them.
The report also said the absence of cybercrime-related laws has hindered authorities’ ability to prosecute trafficking linked to online scam operations.
More victims identified, but protection remains limited
The report recorded progress in identifying and assisting trafficking victims.
Palau identified seven victims during the reporting period, all foreign nationals. Six were victims of forced labor and one was a victim of sex trafficking. This was an increase from two victims identified in the previous reporting period.
The government assisted six victims, compared with two previously, providing legal support, help finding jobs, housing relocation, wellness checks and basic necessities.
Government spending on victim assistance also increased slightly, from approximately $2,300 in 2024 to $3,000 in 2025.
Authorities granted four temporary work permits and one extended work permit to trafficking victims, compared with one work permit in the previous reporting period. These permits can help victims remain legally employed rather than be forced to return to exploitative working conditions.
The report said victims did not have to participate in law enforcement proceedings to receive services. Six victims voluntarily participated in investigations.
However, the lack of a government shelter, long-term support services and sufficient funding for victim protection continues to limit the help available to people escaping exploitation.
The government, working with a foreign government, continued construction of a national shelter for crime victims, including trafficking victims. Until that shelter becomes available, the report said, the lack of dedicated accommodation remains a major weakness in Palau’s response.
Foreign workers remain especially vulnerable
The report identifies foreign workers as particularly vulnerable to trafficking in Palau.
Foreign nationals account for about one-third of the country’s population of approximately 18,000. Workers with limited education or English-language skills face increased risks, especially when they depend on employers or recruiters for jobs, immigration status and housing.
Workers from countries including the Philippines, Bangladesh, Nepal, Thailand, Vietnam, South Korea and China may pay thousands of dollars in recruitment fees to secure jobs in Palau. In some cases, workers pay as much as $8,000 before arriving.
Some workers are then exploited in domestic service, agriculture, construction, hospitality and food service. Others face forced labor on fishing boats or in illegal online gambling and online scam operations.
The report said traffickers sometimes confiscate workers’ passports to prevent them from leaving. Some foreign workers are also vulnerable when they arrive on tourist visas and are told to change to employment visas after reaching Palau.
Palauan girls are also exploited in sex trafficking, primarily in Koror and Airai, according to the report. Traffickers may use social media and messaging applications to target potential victims.
These risks highlight the importance of effective labor protections, careful recruitment practices and stronger systems for identifying workers who may be experiencing exploitation.
Government efforts to address the gaps
Despite the continuing problems, the report outlines several steps the government has taken to strengthen its response.
The Anti-Human Trafficking Unit coordinates national efforts, leads implementation of the 2022-2025 National Action Plan and has developed an updated plan. A government and nongovernmental organization working group also met to share information about cases and coordinate policies.
The government has provided training for law enforcement, labor, immigration and marine officials on identifying victims, particularly in the fishing industry, and addressing challenges in gathering evidence. Officials and victim advocates also received training on trauma-informed care, which focuses on helping victims without causing further harm.
The government has continued public awareness activities and operates an anti-trafficking hotline for potential victims.
Authorities have also received greater authority to review visa applications, nonresident work permits and foreign investment applications, which the report says could help strengthen immigration controls and reduce trafficking risks.
In addition, the government began implementing a system to streamline customs-related financial transactions. The system is intended to help authorities identify fraudulent transactions that may be connected to criminal activity, including trafficking.
These steps show that efforts are underway, but the report indicates that more action is needed to produce stronger enforcement and protection outcomes.
Recruitment fees and labor protections remain unresolved
One of the report’s major concerns is that Palau has not prohibited workers from paying recruitment fees.
The government also lacks a formal labor recruitment system, a pre-approval visa process and minimum wage requirements for agricultural and domestic service workers, according to the report. These gaps can leave workers vulnerable to debt, deception and forced labor.
The report said the government has not effectively regulated labor recruiters or held them civilly and criminally liable for fraudulent recruitment practices.
Although authorities have an informal policy of placing workers with another employer when they experience hardship, the report indicates that stronger formal protections are needed.
Public awareness campaigns also have not specifically targeted foreign worker communities considered especially vulnerable to trafficking.
The government’s efforts to update its national action plan and strengthen visa reviews provide a foundation for further action. However, the report makes clear that these measures need to be accompanied by stronger recruitment rules, better victim services and effective enforcement.
What the ranking means for Palau
Tier 2 is not a finding that a country has eliminated trafficking or fully met international standards. It indicates that a government is making significant efforts but still falls short of the minimum requirements.
For Palau, the latest report presents a mixed picture: more victims identified, increased assistance and continued work on prevention, but fewer investigations, no new prosecutions or convictions, and continued gaps in shelter services and worker protections.
The report’s findings point to the need for Palau to turn its existing laws, training and policy initiatives into measurable results — including successful investigations and prosecutions, stronger protection for victims, and safeguards that prevent workers from being trapped in exploitative jobs.
For a country that has remained at Tier 2 for much of the past two decades, the challenge is not simply to maintain its ranking. It is to demonstrate that its efforts are making it harder for traffickers to exploit people and easier for victims to seek help and rebuild their lives.
