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Mozambique Country Summary

41.81 Country Rating /100
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Sanctions

No

FATF AML Deficient List

Yes

Terrorism
Corruption
US State ML Assessment
Criminal Markets (GI Index)
EU Tax Blacklist
Offshore Finance Center

Background Information


Anti Money Laundering

FATF Status

Mozambique is on the FATF List of Countries that have been identified as having strategic AML deficiencies

Latest FATF Statement  -  23 February 2024

Since October 2022, when Mozambique made a high-level political commitment to work with the FATF and ESAAMLG to strengthen the effectiveness of its AML/CFT regime, Mozambique has taken steps towards improving its AML/CFT regime, including by ensuring cooperation and coordination amongst relevant authorities to implement risk-based AML/CFT strategies, conducting training for all LEAs on mutual legal assistance, and conducting a comprehensive TF Risk Assessment. Mozambique should continue to work on implementing its action plan to address its strategic deficiencies, including by: (1) providing adequate financial and human resources to supervisors, developing and implementing a risk-based supervision plan; (2) providing adequate resources to the authorities to commence the collection of adequate, accurate and up-to-date beneficial ownership information of legal persons; (3) increasing the human resources of the FIU as well as increasing financial intelligence sent to authorities; (4) demonstrating LEAs capability to effectively investigate ML/TF cases using financial intelligence; (5) beginning implementation of a comprehensive national CFT strategy; (6) increasing awareness on TF and PF-related TFS; and (7) carrying out the TF risk assessment for NPOs in line with the FATF Standards and using it as a basis to develop an outreach plan.

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Mozambique was undertaken in 2021. According to that Evaluation, Mozambique was deemed Compliant for 3 and Largely Compliant for 7 of the FATF 40 Recommendations. It was deemed Highly Effective for 0 and Substantially Effective for 0 of the Effectiveness  & Technical Compliance ratings.

US Department of State Money Laundering assessment (INCSR)

Mozambique was deemed a Jurisdiction of Primary Concern by the US Department of State  International Narcotics Control Strategy Report (INCSR).

Overview

Money laundering (ML) in Mozambique is driven by misappropriation of state funds, kidnappings, terrorist financing (TF), and the trafficking of humans, narcotics, and wildlife.  With a long, largely unpatrolled coastline, porous land borders, and limited rural law enforcement presence, Mozambique is a major corridor for illicit goods including hardwoods, gemstones, wildlife products, and narcotics.  Narcotics are typically trafficked through

Mozambique to other African nations and then on to further destinations, such as Europe and the United States.  

In 2021, the Mozambican government continued working with international partners to fight corruption and implement its anti-money laundering/combating the financing of terrorism (AML/CFT) laws.  The Maputo City Court (MCC) started the trial for 19 defendants, including the son of the former president and the former director of Mozambique’s intelligence service, accused of profiting from $2 billion of illicitly acquired state loans.  It also sentenced the former minister of transportation for accepting bribes.  

The Bank of Mozambique (BOM) froze a large commercial bank’s operations while investigating allegations of currency manipulation and fined bank officials.  

The government authorized its financial intelligence unit (FIU) (GIFIM – Portuguese acronym) to seek membership in the Egmont Group of FIUs (Egmont Group).

Sanctions

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

Bribery & Corruption

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                         25

World Governance Indicator – Control of Corruption             22

Companies looking to operate in Mozambique face a very high risk of corruption in most sectors. Forms of corruption range from petty bribes to deeply entrenched clientelistic and patronage systems, and donor countries have shown dissatisfaction over the country's anti-corruption efforts. Corruption is particularly prominent in public procurement and the tax and customs administrations. Even though a relatively well-established legal framework is in place, many loopholes exist. For instance, the Anti-Corruption Law does not cover all forms of corruption (e.g., embezzlement is not covered). The judiciary is generally considered corrupt and is subject to political influence, impeding the effective enforcement of the law. Gifts and facilitation payments are common when dealing with officials. For further information - GAN Integrity Business Anti-Corruption Portal

Economy

Mozambique’s lengthy coastline, deep-water ports, favorable climate, rich soil, and vast natural resources give the country significant potential, but investors perceive it as a risky market. The Government of the Republic of Mozambique (GRM) announced a slate of economic reforms in August 2022, including fiscal reforms and investment incentives. As part of the economic reform package, the government simplified procedures in logistic corridors, implemented a new e-visa system to facilitate entry into the country for tourists and business, and announced its intention to exempt 29 countries including the United States from entry-visa requirements. In 2023, the government expects to begin digital business registration and pass legislation to revise the investments and labor laws. Although the government is working to improve fiscal policies at the national level, the inconsistent and unpredictable application of combined local and national taxes remains burdensome. Many business contacts have complained that other challenges to investment include corruption, barriers to private land ownership, high interest rates, and poor infrastructure. Heavy rains and tropical storms cause frequent degradation of roads, bridges, and other infrastructure. Mozambican labor laws make it difficult to hire and fire workers, and court systems are bogged down by labor disputes. The domestic workforce lacks many advanced skills needed by industry, and the complicated visa process makes hiring foreign workers difficult.

Energy companies began exporting natural gas from a floating LNG (FLNG) platform offshore of the northern province of Cabo Delgado in November 2022. However, companies have delayed two larger multi-billion-dollar onshore LNG projects due to continued terrorism-related insecurity in northern Mozambique.

Mozambique is eager to partner with the United States on climate issues but lacks resources. The GRM joined initiatives such as the Agricultural Innovation Mission for Climate (AIM4C) and the Global Methane Pledge. Mozambique is a growing producer of critical minerals, including aluminum, cobalt, graphite, and titanium, although some mines in Cabo Delgado had to temporarily suspend operations due to terrorist activity.

The GRM partnered constructively with the United States and other members of the donor community on economic reforms. In May 2022, the IMF Board approved a 36-month, $456 million program that aims to reinforce Mozambique’s economic recovery while addressing challenges related to debt and financing and encourages good governance and improved management of public resources. The GRM is working with the U.S. Millennium Challenge Corporation (MCC) to sign a second MCC compact in 2023, valued at approximately $500 million over five years. Through this compact, MCC plans to invest in transportation infrastructure, climate resilience and coastal restoration, and commercial agriculture in Mozambique’s central Zambezia Province, while promoting business-enabling reforms at the national level.

Russia’s invasion of Ukraine caused commodity price shocks that contributed to inflation in Mozambique. Higher prices for wheat and fertilizers raised food prices and decreased grain imports caused some Mozambicans to substitute locally grown staples such as cassava for imported wheat.

 

Country Links

Bank of Mozambique

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