Micronesia Country Summary

FATF Status

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

Compliance with FATF Recommendations

Micronesia has not yet undertaken a Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards.

The Federated States of Micronesia (FSM) faces significant challenges related to crime and corruption, despite having laws in place to combat these issues. Corruption is reportedly widespread among government officials, with cases of bribery and procurement fraud being prosecuted, although the lack of dedicated anti-corruption agencies and resources hampers enforcement efforts.

Human trafficking, particularly of women and girls, is a pressing concern, alongside the illicit trade in counterfeit goods and illegal fishing, which threaten the country's economy. While FSM has a stable democratic governance structure and an independent judiciary, limited resources and economic dependence on U.S. assistance hinder effective crime prevention and law enforcement, leaving the nation vulnerable to both domestic and transnational criminal activities.

The Federated States of Micronesia (FSM) is classified as a lower middle-income nation with a population of approximately 71,000, reflecting a significant decline since the last census in 2010. Its economy is heavily reliant on external financial assistance from the United States under the Compact of Free Association, which provides around $140 million annually, alongside income from commercial fishing and the sale of fishing rights. Despite having substantial trust funds intended for long-term revenue support, the FSM faces significant barriers to foreign direct investment due to restrictive land ownership laws, a weak legal system, and inadequate infrastructure, which collectively hinder economic diversification and growth.