After eight referendums and an amendment to the Palauan constitution, the Compact was ratified in 1993. The Compact went into effect on October 1, 1994, marking Palau de jure independent, although it had been de facto independent since May 25, 1994, when the trusteeship was cancelled.
Legislation making Palau an "offshore" financial center was passed by the Senate in 1998. In 2001, Palau passed its first bank regulation and anti-money laundering laws
