SWAZILAND
Summary

Sanctions

None

FAFT AML Deficient

No

Higher Risk Areas

Compliance with FATF 40 + 9 Recommendations

Not on EU White list equivalent jurisdictions

Medium Risk Areas

 

Weakness in Government Legislation to combat Money Laundering

Corruption Index (Transparency International & W.G.I.)

World Governance Indicators (Average Score)

Failed States Index (Political Issues)(Average Score)

 

 

ANTI-MONEY LAUNDERING

 

FATF Status

Swaziland is not on the FATF List of Countries that have been identified as having strategic AML deficiencies

 

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Swaziland was undertaken by the Financial Action Task Force (FATF) in 2011. According to that Evaluation, Swaziland was deemed Compliant for 1 and Largely Compliant for 0 of the FATF 40 + 9 Recommendations. It was Partially Compliant or Non-Compliant for all 6 of the Core Recommendations.

 

US Department of State Money Laundering assessment (INCSR)

Swaziland was deemed a ‘Monitored’ Jurisdiction by the US Department of State 2014 International Narcotics Control Strategy Report (INCSR).

Key Findings from the report are as follows: -

 

The Kingdom of Swaziland is not considered a regional financial center. The financial sector in the Kingdom is small and dominated by subsidiaries of South African financial institutions. The small size of the country and its proximity to major cities in Mozambique and South Africa make it a transit country for illegal operations in those countries and, to some extent, in the rest of the Southern African region. Proceeds from the sale or trade of marijuana are laundered in Swaziland. Cash gained from the sale of marijuana and through other illegal activities is sometimes used to buy goods for retail outlets or to build houses on non-titled land. A large amount of such proceeds is moved via cross-border transactions involving banks, casinos, investment companies, and savings and credit cooperatives.

There is a significant black market for smuggled consumer goods, such as cigarettes, liquor, and pirated CDs and DVDs, transited across the porous borders of Mozambique, South Africa, and Swaziland. There is a general belief that trade-based money laundering exists in Swaziland. Proceeds generated through corruption are a major concern, as is human trafficking. Swazi officials believe the Kingdom to be at little risk of terrorism financing.

The Common Monetary Area provides a free flow of funds among South Africa, Swaziland, Lesotho, and Namibia, with no exchange controls. Cash smuggling reports are informally shared on the basis of reciprocity among the relevant host government agencies.

 

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SANCTIONS

There are no international sanctions currently in force against this country.

 

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BRIBERY & CORRUPTION

 

Index

 

Rating (100-Good / 0-Bad)

Transparency International Corruption Index

39

World Governance Indicator – Control of Corruption

47

 

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INVESTMENT CLIMATE - Executive Summary (US State Department)

The Government of the Kingdom of Swaziland views foreign investment as a means to drive economic growth. The government states its intention to develop and improve investment and trade policies in order to facilitate the ease of doing business in the country, but the pace of reforming the business climate is slow. Swaziland launched an Investor Roadmap in 2005, which details the procedural, administrative and regulatory barriers that hinder investment in the country and recommends regulatory reforms to improve the country’s competitiveness. Implementation of the Investor Roadmap was re-launched in 2012 and is slowly progressing.

State owned enterprises and the royal family’s private trust are invested in many industries and distort the economy through their influence. Virtually all large scale investments in Swaziland involve, either by law or by custom, the participation of the government and King Mswati III as a partner. Public sector and royal family involvement in the economy discourages private investment and encourages monopolistic behavior driving up prices and reducing competitiveness of the country. In addition, Swaziland’s land tenure system, where the majority of usable land remains the property of the King “in trust for the Swazi nation,” discourages long-term investment in commercial real estate and agriculture.

Government has prioritized the renewable energy sector and is currently crafting policy to attract private investment. Swaziland's demand for electricity is continuing to rise and the country imports 80 percent of its power from South Africa and Mozambique. A developed renewable energy sector in Swaziland would make the energy supply more reliable and create domestic employment. In the long term, renewable energy would also have environmental benefits provide energy self-sufficiency for the country.

Swaziland is continuing to recover from the 2012 fiscal crisis that began in 2010 after a sharp decline in revenue from the Southern African Customs Union (SACU), on which more than fifty percent of the government budget depends. In 2012 the IMF had suspended its engagement with Swaziland because of the government’s lack of commitment to reform the public sector and reduce the cost of public sector wages. The African Development Bank also suspended its budgetary assistance.

Swaziland’s poor human rights and labor rights record has jeopardized its access to export markets and to donor support. In 2014, Swaziland risks losing its duty free access to the U.S. market under the African Growth and Opportunity Act (AGOA) due to continued infringements on internationally recognized workers’ rights. Swaziland also remains ineligible for Millennium Challenge Corporation (MCC) support due to its poor rankings on political and civil liberties by international non-governmental organizations.

Fortunately, improved SACU revenues in 2014 and increased domestic revenue collection have reduced the likelihood of a financial crisis in the near term. However, Swaziland’s gross domestic product (GDP) growth is the slowest in the Southern African Development Community (SADC) region.

 

 

 

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