FATF AML Deficiency List


Higher Risk

US Dept of State Money Laundering assessment
Non - Compliance with FATF MER Recommendations
Corruption Index (Transparency International & W.G.I.)
World Governance Indicators (Average Score)

Weakness in Government Legislation to combat Money Laundering




FATF Status

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


Compliance with FATF Recommendations

The first follow-up  Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Madagascar was undertaken in 2020. No changes to Recommendations were made. According to the original Evaluation, Madagascar was deemed Compliant for 4 and Largely Compliant for 9 of the FATF 40 Recommendations. It was deemed Highly effective for 0 and Substantially Effective 0 of the Effectiveness  & Technical Compliance ratings.


US Department of State Money Laundering assessment (INCSR)

Madagascar was deemed a ‘Monitor’ Jurisdiction by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR). Key Findings from the report are as follows: -


Madagascar is neither a regional financial center nor a major source country for drug trafficking; however, Madagascar’s inadequately monitored 3,000 miles of coastline leave the country vulnerable to smuggling and associated money laundering. Criminal proceeds laundered in Madagascar derive mostly from domestic criminal activity, not generally related to the narcotics trade. The major sources of laundered proceeds in 2015 are tax evasion, tax appropriation, and customs fraud. Illegal mining and mineral resources smuggling, illegal logging, public corruption, and foreign currency smuggling are also areas of concern.


The deterioration in the rule of law initiated by the leaders of the 2009 coup d’état continues to facilitate trafficking of natural resources (rosewood, gold, precious stones) and persons as well as foster corruption throughout society (tax evasion, smuggling of goods, etc.). The current president was democratically elected in December 2013, and since then has publicly and privately proclaimed an emphasis on combatting corruption. The government has not successfully prosecuted any anti-corruption cases aside from low level individuals. The smuggling of gold, gemstones (predominantly to the Gulf), and protected flora and fauna (predominantly to Asia) generates funds that are laundered through the financial system or through informal channels into which the government has limited reach. There is a significant black market for smuggled or stolen consumer goods, especially in port cities. Trade-based money laundering occurs in Madagascar, involving both customs fraud and contraband. Members of the former regime profited from, facilitated, and even directed criminal activity and money laundering.  Media reports that they continue to do so.


Offshore banks and international business companies are permitted in Madagascar. Along with domestic banks and credit institutions, offshore banks are required to request authorization to operate from the Financial and Banking Supervision Committee, which is affiliated with the Central Bank.



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





Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                           25

World Governance Indicator – Control of Corruption             16



Agriculture, including fishing and forestry, is a mainstay of the economy, accounting for more than one-fourth of GDP and employing roughly 80% of the population. Deforestation and erosion, aggravated by the use of firewood as the primary source of fuel, are serious concerns.


After discarding socialist economic policies in the mid-1990s, Madagascar followed a World Bank- and IMF-led policy of privatization and liberalization until the onset of a political crisis, which lasted from 2009 to 2013. The free market strategy had placed the country on a slow and steady growth path from an extremely low starting point. Exports of apparel boomed after gaining duty-free access to the US in 2000; however, Madagascar's failure to comply with the requirements of the African Growth and Opportunity Act (AGOA) led to the termination of the country's duty-free access in January 2010, a sharp fall in textile production, and a loss of more than 100,000 jobs.


Madagascar regained AGOA access in January 2015 following the democratic election of a new president the previous year. In November 2015, the International Monetary Fund (IMF) approved a Rapid Credit Facility to Madagascar worth about $42.1 million to help the government meet its balance of payments needs. The IMF also approved a staff monitoring program to guide policy implementation and indicated that Madagascar must demonstrate the capability to sustain reforms to qualify for future requests for a credit facility.

Agriculture - products:

coffee, vanilla, sugarcane, cloves, cocoa, rice, cassava (manioc, tapioca), beans, bananas, peanuts; livestock products



meat processing, seafood, soap, beer, leather, sugar, textiles, glassware, cement, automobile assembly plant, paper, petroleum, tourism, mining


Exports - commodities:

coffee, vanilla, shellfish, sugar, cotton cloth, clothing, chromite, petroleum products


Exports - partners:

France 15.2%, US 12.7%, China 7.1%, South Africa 5.9%, Japan 5.5%, Netherlands 5.4%, Germany 5.1%, Belgium 5%, India 4.4% (2015)


Imports - commodities:

capital goods, petroleum, consumer goods, food


Imports - partners:

China 24.8%, France 10.3%, Bahrain 5.6%, India 5.5%, Kuwait 4.5%, Mauritius 4.5%, South Africa 4.3% (2015)


Investment Climate  -  US State Department

Madagascar is an island nation located in the western Indian Ocean. In 2014, the first elected administration since 2009 assumed power. Since his election, the President has emphasized the importance of attracting foreign investment, citing private sector-led growth as the engine for the future economic development of Madagascar. To this end, the government has promised to undertake a number of revisions to update the legislative framework governing the business and investment environment.


Despite these intentions, attracting foreign direct investment has remained a challenge due to persistent corruption at all levels of government, a lack of resources, and the government’s difficulty enforcing regulations. A severe lack of infrastructure, particularly in the areas of transportation and provision of electricity, also creates challenges. Though there is no formal discrimination against foreign investors, foreign companies are frequently the target of harassment by tax authorities and are often subject to nuisance suits regarding questionable tax assessments and labor law violations.


Extractive industries, particularly the mining sector, have been the largest driver of economic growth over the past few years, though the current slump in global demand for commodities has slowed activity in this sector over the past year. Nevertheless, a number of deposits have been identified for future commercial development – including iron ore, ilmenite, graphite, coal, and rare earths. The eventual development of these projects may present opportunities for U.S. suppliers of machinery and power generation equipment. Madagascar also has approximately 250 plus available oil exploration blocks, which it intends to auction off after passage of its revised petroleum legislation, planned for later this year.


Over the past year, the sectors that have attracted the most new foreign direct investment have been the services industry (call centers, focusing primarily on the francophone market) and light manufacturing in the apparel industry. Madagascar’s eligibility for duty free access to the United States under the African Growth and Opportunity Act was reinstated in June 2014, and the extension by the U.S. Congress of the AGOA legislation for a further ten years in July 2015 has prompted further investment in the Malagasy apparel sector. Malagasy exporters under AGOA have begun to diversify from apparel to include other products, such as accessories and handicrafts.


Other sectors that are potentially attractive for U.S. investors include energy, construction, agribusiness, fisheries and aquaculture, and tourism. The government recently passed legislation establishing the first ever regulatory framework for public-private partnerships, and it will seek foreign investment to rehabilitate and extend its dilapidated infrastructure in accordance with its five-year National Development Plan.


The legislative framework governing investment in Madagascar does not discriminate against foreign investors, nor does it prohibit, limit, or condition foreign investments. Any natural person or legal entity, Malagasy or foreign, is free to invest in Madagascar, in accordance with the laws and regulations in force, and national treatment is not denied to foreign investors in any sector.

Despite presenting challenges to investment akin to those encountered in many other developing countries, Madagascar remains a country of vast resources and potential.


Country Links
Central Bank of Madagascar
Other Useful Links
US State Department
Transparency International
World Bank
CIA World Factbook