FATF Status

Portugal 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 Portugal was undertaken by the Financial Action Task Force (FATF) in 2017. According to that Evaluation, Portugal was deemed Compliant for 12 and Largely Compliant for 22 of the FATF 40 Recommendations.

US Department of State Money Laundering assessment (INCSR)

Portugal was last deemed a Jurisdiction of Primary Concern in the US Department of State 2018 International Narcotics Control Strategy Report (INCSR). The Overview from that report was as follows: -

Portugal has AML laws and enforcement mechanisms that meet international standards and has taken steps in 2017 to further improve AML legislation. The majority of money laundered in Portugal is narcotics-related, according to Portuguese officials, who have noted significant criminal proceeds also come from corruption, trafficking in works of art and cultural artifacts, extortion, embezzlement, tax offenses, smuggling, prostitution, organized crime, gambling, and aiding or facilitating illegal immigration. Suspicious funds from Angola continue to be used to purchase Portuguese businesses and real estate. Portugal has taken steps throughout 2017 to strengthen its AML legislation; new laws decrease the size of payments that can legally be made in cash, create a national registry of transaction recipients, and compel attorneys to report suspected money laundering activities to authorities. In late 2017, Portugal proposed laws relaxing bank secrecy and allowing tax inspectors access to information on bank accounts suspected of being affiliated with money laundering.

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                         61

World Governance Indicator – Control of Corruption             76

Foreign companies operating in Portugal may encounter some instances of corruption, but they do not identify corruption as a problem for thier operations. Corruption and abuse of power are most prevalent at the municipal level, particularly in the areas of urban planning and public procurement. The Portuguese Criminal Code makes it illegal to give or accept a bribe, and there is a law (in Portuguese) that establishes the terms of liability for corruption offences in international trade and private activities. Amendments (in Portuguese) to the Criminal Code comply with GRECO, UN and OECD's recommendations on fighting corruption. Individuals and companies are criminally liable for corruption offences, including bribery of foreign public officials in international commerce. Facilitation payments are prohibited, and gifts and hospitality may be considered illegal depending on their intent. Recurring corruption scandals involving high-level politicians, local administrators and businesses abusing public funds have revealed that safeguards to counter corruption, and abuses of power have been somewhat inefficient in Portugal.  

Following an 8.4% contraction in GDP in 2020, Portugal bounced back strongly from the pandemic with the economy accelerating 4.9% in 2021 and 6.7% in 2022, partially due to the EU’s fiscal and monetary stimulus. The important tourism sector was also a big factor. U.S. tourists, for example, jumped to about 1.5 million in 2022, beating the pre-pandemic record of 1.2 million in 2019. As a result, the labor market continues to show remarkable resiliency, with unemployment at 6% in 2022, down from 6.6% in 2021. The Socialist Portuguese government has showed a strong commitment to reducing the fiscal debt and deficit, progressively improving its sovereign credit ratings.

The rosy post-pandemic economy was severely impacted by Russia’s aggression against Ukraine, causing a spike in energy and food costs that fed into inflation, running at 7.4% in March 2023. As the ECB raises interest rates and withdraws its loose monetary policy in response, Portuguese households are especially vulnerable, as about 80% of mortgages are variable rate. GDP expansion is expected to slow down to 1.3% in 2023 and labor strife has increased. Longer term, Portugal has also struggled with a chronic emigration of highly qualified workers for higher paying careers in Switzerland, France, the UK, Luxembourg and elsewhere. Combined with low fertility rates, Portugal would face a demographic collapse, without net immigration from Brazil and elsewhere.

As of 2022, the three top FDI sources were Spain (€25.7 billion), France (€17.2 billion) and the United Kingdom (€13.4 billion). The United States is an increasingly significant player, with an €8.2 billion FDI stock in 2022. Many U.S. companies have established business/service delivery centers in Portugal, taking advantage of Portugal’s relatively low-cost, talented, and multilingual labor force. Portugal’s tech startup scene is thriving, with firms tapping into the U.S. startup ecosystem for funding, knowhow, networks and customers, which ultimately produces new jobs on both sides of the Atlantic. However, Portugal also ranks second highest in terms of PRC investments in Europe (in relation to GDP), predominantly in premier Portuguese companies, which the PRC leverages to reach other markets in Europe, Latin America and Africa. New PRC investments are planned in electric batteries and other renewable energy areas. Nonetheless, there has been some recent progress in countering PRC influence in Portugal, from 5G to investment screening, as Portugal tries to align with EU directives.

While increased U.S. LNG supplies were crucial to mitigate supply shocks last year, Portugal has embarked on an unprecedented push into renewable energy and electric mobility, creating opportunities in everything from offshore wind and green hydrogen to lithium mining and refining and battery technology.

Country Links

Financial Intelligence Unit Portugal (UIF-Portugal)

Portuguese Securities Market Commission (CMVM)

Portuguese Insurance Regulator (ASF)

Bank of Portugal