Lesotho Country Summary

FATF Status

Lesotho 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 Lesotho was undertaken in 2023. According to that Evaluation, Lesotho was deemed Compliant for 7 and Largely Compliant for 12 of the FATF 40 Recommendations. It was deemed Highly Effective for 0 and Substantially Effective for 0 of the Effectiveness ratings.

Lesotho faces significant challenges related to crime and corruption, with pervasive issues affecting governance and law enforcement. Despite the establishment of various anti-corruption laws and the Directorate on Corruption and Economic Offences (DCEO) to combat these issues, many officials continue to engage in corrupt practices with little accountability, hampered by resource constraints and political instability.

The country is also grappling with organized crime, including human trafficking, drug smuggling, and financial scams, exacerbated by its geographical isolation and porous borders. While there are efforts to enhance resilience through international cooperation and legal frameworks, the effectiveness of these measures is undermined by political crises, inadequate judicial support, and a lack of resources for civil society organizations.

Lesotho's economy is characterized by its openness to foreign direct investment (FDI), with the government actively seeking to enhance the business environment through reforms in licensing and infrastructure. Despite these efforts, challenges such as the lack of comprehensive investment policies, high labor costs, and environmental vulnerabilities hinder investor confidence, particularly in key sectors like manufacturing and agriculture. The government aims to bolster the private sector and create jobs, with a focus on renewable energy as a potential growth area, while also addressing issues of corruption and gender-based violence that affect the overall investment climate.