FATF Status

Oman is not currently identified by FATF as having substantial money laundering and terrorist financing (ML/TF) risks or having strategic AML/CFT deficiencies

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Oman was undertaken by the Financial Action Task Force (FATF) in 2011. According to that Evaluation, Oman was deemed Compliant for 3 and Largely Compliant for 24 of the FATF 40 + 9 Recommendations. It was Partially Compliant or Non-Compliant for 1 out of 6 of the Core Recommendations.

US Department of State Money Laundering assessment (INCSR)

Oman was deemed a “Monitored” Jurisdiction (Lower Risk) by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR). Key Findings from the report are as follows: -

Oman is not a regional or offshore financial center and does not have significant money laundering or terrorism financing concerns.  Due to its location on the tip of the Strait of Hormuz, Oman is home to a small number of smugglers operating between Musandam, the northern-most exclave of Oman, and Iran. Omani authorities are aware that growing Iranian overtures toward Oman for increased trade and engagement, particularly in light of potential sanctions relief, may create conditions for money laundering/terrorism financing activity. Trade is generally financed with small amounts of cash and mostly comprises consumer goods. Oman is a regional transit point for narcotics from Afghanistan, Pakistan, Iran, and Tanzania, although the government is proactive in tracking and prosecuting drug traffickers. Sources of illegal proceeds are generally limited and derived from smuggling or drug trafficking activities. Smugglers and drug traffickers are generally expatriates.

Corruption, primarily in the form of cronyism or insider operations, remains a concern. Since 2013, the government has been taking legal action against senior officials in the housing sector and senior executives of partially state-owned enterprises accused of corrupt practices in the oil and gas sector.

EU Commission Tax Blacklist

On October 6, 2020, the EU Commission confirmed that Oman  was considered as compliant with all its commitments after it ratified the OECD Convention on Mutual Administrative Assistance in Tax Matters, enacted legislation to enable automatic exchange of information and took all the necessary steps to activate its exchange-of-information relationships with all the EU member states.

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                           43

World Governance Indicator – Control of Corruption             58

Corruption is generally not an obstacle for businesses in Oman. Nonetheless, risks are higher when dealing with the elite as nepotism is widespread in the higher echelons of the government. The intertwined business interests of the political elite have resulted in perceived widespread political corruption. Businesses face a high corruption risk when operating in the public procurement sector. However, petty corruption does not constitute a barrier for business, and the practice of bribery is not common in Oman. Efforts to curb corruption among government officials have led to the prosecution of several high-ranking officials for crimes of corruption and abuse of office in recent years. The Omani Penal Code and the Law for the Protection of Public Funds and Avoidance of Conflicts of Interest constitute the legal framework to tackle corruption, and the government generally implements these laws effectively. Gifts that are intended to influence the acts of public officials are criminalized in Oman. For further information - GAN Integrity Business Anti-Corruption Portal

Oman’s location at the crossroads of the Arabian Peninsula, East Africa, and South Asia and in proximity to larger regional markets is an attractive feature for potential foreign investors. Some of Oman’s most promising development projects and investment opportunities involve its ports and free zones, most notably in Duqm, where the government envisions a 2,000 square-kilometer free trade zone and logistics hub. With a “friends of all, enemies of none” foreign policy, Oman does not face the external security challenges of some of its neighbors. Oman’s domestic political situation is stable.

The United States and Oman share a strong bilateral relationship based on a joint commitment to the security, stability, and prosperity of the region. In 2009, the two countries signed the U.S.-Oman Free Trade Agreement (FTA), which removed most customs duties, allowed citizens to set up businesses without a local sponsor, and gave businesses and investors the right to 100 percent ownership of companies in Oman. The United States is Oman’s biggest non-oil export destination, ahead of the United Arab Emirates and Saudi Arabia, registering $2.73 billion in 2022, a 47-percent increase from 2021. The United States was also the second largest foreign direct investor in Oman in Q3 2022 ($6.5 billion) after the United Kingdom ($23.6 billion).

In February 2023, Oman hosted the first U.S.-Oman Strategic Dialogue, which focused on education and cultural exchange, trade and investment, and renewable energy. On the sidelines of this event, the Export-Import Bank of the United States (EXIM) and the Omani government signed a memorandum of understanding to use $500 million in EXIM financing to establish projects in wireless communication equipment; 5G network, biotechnology, renewable energy, agriculture, water and wastewater treatment, mining and manufacturing sectors, among others.

Oman is making strides to diversify its economy, including an energy transition; for now, it remains dependent on oil and gas revenues. High oil prices and fiscal consolidation improved Oman’s fiscal and external balances considerably in 2022. Effects on the local economy from the war in Ukraine have been limited, but citizens have raised concerns on social media about inflationary pressures and the lack of jobs. Under its Vision 2040 development plan, Oman is keen to diversify its income sources and develop the logistics, manufacturing, technology, gas, food, and tourism sectors, among others.

Oman’s continued success in attracting investment and growing its economy will depend in part on revising labor policies, which some U.S. companies tell us can be challenging to navigate. Smaller companies with limited or no local or regional experience report bureaucratic difficulties, including sometimes lengthy approvals processes to establish operations. The government recognizes these challenges and is working to address them as part of efforts to improve the investment climate and achieve its economic development goals under Vision 2040.

Under Sultan Haitham bin Tarik Al Said’s leadership, Oman is developing incentives for foreign investors, including tax and fee incentives, permissions to invest in several new industries, lower government fees, expanded land use, and increased access to capital for qualifying companies. Special incentives also exist for investors in industrial areas and economic zones, such as the city and port of Duqm – Oman’s premier infrastructure project, with an 800-square-mile free trade zone and logistics hub. In February 2023, Oman’s Council of Ministers reduced commercial registration fees for foreign investors and exempted companies from insurance bond requirements while submitting bids for government tenders.

Oman’s success in attracting investment will also depend on its ability to open additional sectors to private-sector competition and foreign investment, minimize bureaucratic hurdles, make its tender system more transparent, and increase access to credit, including for entrepreneurs.

Country Links

Capital Market Authority (Oman)

Central Bank of Oman