The Cook Islands finance minister, Tapi Taio, has called an immediate halt to all foreign investment through the Development Investment Board.
The freeze has been implemented while an investigation takes place into the activities of a Cook islands resident who has been arrested in Europe and charged with kidnapping the son of a millionaire, demanding a 19 million dollar ransom.
Mr Taio has demanded a complete review of procedures used by the DIB to screen foreign investors.
He says the alleged kidnapper and his family were not properly screened by the DIB, who are not equipped with an adequate system.
"Because these guys have been sitting in the Cook Islands for the last four years, they have bought properties here, they have spent big money. And from the issues that have been reported from overseas, they have been involved in drugs, money laundering and all this. While the country is trying to spend hundreds of thousands of dollars to clear our name with the blacklist, we have these people in our backdoor and already on our land."
The Chairman of the Development Investment Board, Mark Brown, says he has not yet been fully briefed on the reasons behind the moratorium on foreign investment imposed by Mr Taio.
The freeze has been implemented while an investigation takes place into the activities of the arrested Cook Islands resident.
Mr Brown says they support the investigation, but until it's complete
the DIB won't be in a position to know whether their procedures should be reviewed.
Mr Brown says the alleged kidnapper and his family were properly screened.
But as far as the DIB was concerned, when this particular individual was registered, three years ago now, the checks the DIB undertook in terms of due diligence and so forth, indicated that this was a bona fide investor with no criminal record - a person that fitted the profile of the investment code that we had at the time, so there was no reason for the DIB to deny his application to register his business here.
Chairman of the Development Investment Board, Mark Brown