Sao Tome & Principe
FATF AML Deficiency List
US Dept of State Money Laundering assessment
Non - Compliance with FATF MER Recommendations
World Governance Indicators (Average Score)
Weakness in Government Legislation to combat Money Laundering
Corruption Index (Transparency International & W.G.I.)
FATF Statement re AML Strategic Deficiencies: 18 October 2013
São Tomé and Príncipe was earlier identified in the FATF’s Public Statement. While São Tomé and Príncipe has made recent progress, its AML/CFT framework still contains a number of strategic deficiencies. Given the small size of this country’s financial sector and its low impact on the international financial system, however, the FATF decided that São Tomé and Príncipe should continue to work closely with GIABA to address its remaining AML/CFT deficiencies.
Compliance with FATF Recommendations
The initial Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Sao Tome was undertaken in 2013. According to that Evaluation, Sao Tome was deemed Compliant for 0 and Largely Compliant for 2 of the FATF 40 + 9 Recommendations. It was Partially Compliant or Non-Compliant for all 6 of the Core Recommendations.
US Department of State Money Laundering assessment (INCSR)
Sao Tome and Principe was deemed a ‘Monitored’ Jurisdiction by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR). Key Findings from the report are as follows: -
Sao Tome and Principe (STP) has a small banking sector and is not a regional financial center. The economy is almost entirely cash-based, though limited automated teller machine service is available. There is no evidence that significant money laundering or illicit financial activity linked to the drug trade, contraband smuggling, or terrorism occurs in STP. The country’s AML/CFT framework contains a number of strategic deficiencies.
There are no international sanctions currently in force against this country.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index 47
World Governance Indicator – Control of Corruption 61
This small, poor island economy has become increasingly dependent on cocoa since independence in 1975. Cocoa production has substantially declined in recent years because of drought and mismanagement. Sao Tome and Principe has to import fuels, most manufactured goods, consumer goods, and food, making it vulnerable to fluctuations in global commodity prices. Maintaining control of inflation, fiscal discipline, and increasing flows of foreign direct investment into the oil sector are major economic problems facing the country. The government also has attempted to reduce price controls and subsidies.
Over the years, Sao Tome and Principe has had difficulty servicing its external debt and has relied heavily on concessional aid and debt rescheduling. It benefited from $200 million in debt relief in December 2000 under the Highly Indebted Poor Countries program, which helped bring down the country's $300 million debt burden. In August 2005, the government signed on to a new 3-year IMF Poverty Reduction and Growth Facility program worth $4.3 million. In April 2011, the country completed a Threshold Country Program with The Millennium Challenge Corporation to help increase tax revenues, reform customs, and improve the business environment.
Considerable potential exists for development of a tourist industry, and the government has taken steps to expand facilities in recent years. Potential also exists for the development of petroleum resources in Sao Tome and Principe's territorial waters in the oil-rich Gulf of Guinea, which are being jointly developed in a 60-40 split with Nigeria, but any actual production is at least several years off.
Agriculture - products:
cocoa, coconuts, palm kernels, copra, cinnamon, pepper, coffee, bananas, papayas, beans; poultry; fish
light construction, textiles, soap, beer, fish processing, timber
Exports - commodities:
cocoa 80%, copra, coffee, palm oil (2010 est.)
Exports - partners:
Netherlands 29.2%, Belgium 22.4%, Spain 15.5%, US 6.6%, Nigeria 5.1% (2015)
Imports - commodities:
machinery and electrical equipment, food products, petroleum products
Imports - partners:
Portugal 65.2%, China 8.1%, Gabon 7.3% (2015)
Investment Climate - US State Department
The island nation of Sao Tome and Principe (STP) is situated in the equatorial Atlantic in the Gulf of Guinea. STP is taking positive steps toward improving its investment climate and making the country a more attractive destination for foreign investment. STP is a stable, multi-party democracy and the government is working to combat corruption and create an open and transparent business environment. An investment code, enacted in 2007, sets forth a modern legal framework for foreign investment. A Millennium Challenge Corporation Country Threshold Program, implemented from 2007 to 2011, modernized STP’s customs administration, reformed its tax policies, and made it considerably less burdensome to start a new business. An anti-money laundering / counter-terrorist financing law adopted in 2013 brought STP into compliance with international standards. With limited domestic capital, STP relied heavily on outside investment and as such is committed to taking necessary reforms to improve its investment climate.
The consensus among government authorities and economic analysts is that considerable foreign investment is needed for STP to realize its development goals and potential. Foreign investors, however, face challenges identifying viable investment opportunities due to STP’s weak domestic economy, inadequate infrastructure, small market, and physical isolation. STP is one of the poorest countries in the world. The World Bank estimates STP’s population at roughly 186,300 and its 2014 gross domestic product at around USD 337.4 million. Due to STP's very limited revenue sources, foreign donors finance roughly 62 percent of its budget. STP's main sources of foreign assistance are Taiwan, Angola, and Nigeria. Tourism, fisheries, infrastructure, and agriculture present the most promising investment opportunities. STP’s extensive maritime domain might present opportunities for hydrocarbon production as technology improves, but falling petroleum prices are curbing interest in new exploration. Seeking to capitalize on its strategic location in the Gulf of Guinea, STP’s government has long sought to attract investment for a deep-water port. As a former Portuguese colony, STP has strong economic ties with Portugal and other Lusophone countries including Angola and Brazil.
STP is politically stable, and the government and business community appear focused on building consensus to develop the country economically and to improve basic social services for the country’s young and growing population. STP has had peaceful demonstrations with a recent history of smooth political transitions. President Manuel Pinto da Costa supports increased foreign investment and welcomes closer U.S. engagement on economic matters. Free and fair legislative and municipal elections held in October 2014 led to a peaceful transition of power to a new government led by the Independent Democratic Action party. Prime Minister Patrice Trovoada, who assumed his position on November 28, 2014, is focused on economic growth and attracting foreign investment.
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