Timor-Leste Country Summary

FATF Status

Timor-Leste 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 Timor Leste was undertaken in 2024. According to that Evaluation, Timor Leste was deemed Compliant for 1 and Largely Compliant for 21 of the FATF 40 Recommendations. It was deemed Highly Effective for 0 and Substantially Effective for 0 of the Effectiveness ratings.

Timor-Leste faces significant challenges related to crime and corruption, with ongoing issues such as human trafficking, organized crime, and public sector corruption. Despite the establishment of the Anti-Corruption Commission and legal frameworks aimed at combating these issues, enforcement remains weak due to limited resources and political influences, complicating efforts to achieve effective governance and justice.

Timor-Leste's economy has faced significant challenges since its independence in 2002, primarily due to a reliance on public-sector spending and a weak private sector that is heavily dependent on government contracts. Despite welcoming foreign investment, the investment climate is hindered by inadequate regulatory frameworks, corruption, and insufficient infrastructure, which the government is actively working to address, albeit slowly. Recent political stability, evidenced by peaceful elections and a desire to join ASEAN and the WTO, has created a more favorable environment for economic reforms, yet the country continues to grapple with high inflation, particularly due to global commodity market pressures, and a need for diversification beyond its oil and gas sector.