FATF Status

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.

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                          N/A

World Governance Indicator – Control of Corruption             63

São Tomé and Príncipe (STP) has taken positive steps over the last decade to improve its investment climate and to make the country a more attractive destination for foreign direct investment (FDI), including by working to combat corruption and create an open and transparent business environment. Due to STP’s limited revenue sources, foreign donors finance roughly 90 percent of its public investment budget. This reliance on outside investment, however, means STP remains committed to improving its investment climate.

A four-year government agenda approved by the Parliament in November 2022, aims to foster sustainable, inclusive, and export-led economic growth; increase purchasing power of STP’s citizens; improve infrastructure and the functioning of public institutions; and strengthen the country’s resilience to the impacts of climate change.

In early April, the government announced the implementation of a Value Added Tax (VAT) would begin June 1, 2023. With the support of the United Nations Development Programme (UNDP), in 2022, the government established the first business incubator and accelerator center (REINA) to support startups and Small and Medium Enterprises (SMEs). UNDP also helped build an arbitration center scheduled to be inaugurated by the end of April 2023 with the purpose of providing a mechanism to resolve investment disputes without going to court, though the center has yet to open. These efforts, along with others from recent years such as passage of the Anti-Money Laundering and Countering the Financing of Terrorism Law (2013); the Public-Private Partnership Law (2018), and an updated Labor Code (2019), have helped to develop a more modern and more transparent legal framework for foreign investment. Due to STP’s reliance on outside investment, the government has focused its efforts on fighting corruption, restoring infrastructure, improving the business environment, reforming the justice system and public administration, attracting FDI, promoting economic growth, and social justice.

STP’s Exclusive Economic Zone (160,000 km2) may hold opportunities for hydrocarbon production as technology improves. The STP government signed a June 2022 agreement with the People’s Republic of China (PRC) to expand and modernize the international airport (Airport Nuno Xavier), with plans to start the project in early 2023, though the work has not yet commenced. STP is using World Bank funding to rehabilitate the road linking the capital to the north of the island and support from the African Development Bank to rehabilitate rural infrastructure, including roads. Foreign investors continue to face challenges identifying viable investment opportunities due to STP’s small and fragile domestic market, inadequate infrastructure, slow moving justice system, high cost of credit, and expensive electricity to which there is limited access. With Europe as a primary source of imports, Russia’s war of aggression against Ukraine led to doubling of the price of most food products. Inflation rose from 9 percent at the end of 2021 to 24 percent by the end of 2022.

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Country Links

Central Bank of São Tomé ​