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 ranks 70th in Transparency International's 2023 Corruption Perceptions Index, with ongoing efforts to combat corruption through the Anti-Corruption Commission and recent legal reforms. Despite some high-profile convictions and the establishment of laws to prevent corruption, challenges persist, including the influence of organized crime and inadequate law enforcement resources. The country faces issues related to human trafficking, illicit trade, and financial crimes, while civil society plays a crucial role in supporting anti-corruption initiatives despite facing political pressures.

Timor-Leste's economy has faced challenges since its independence in 2002, including a contraction in GDP per capita and a reliance on public-sector spending for growth. The private sector remains weak, heavily dependent on government contracts, while oil and gas production, the largest contributor to GDP, is declining due to depleted fields. The government is actively seeking foreign investment and partners to develop its natural resources, particularly the Greater Sunrise offshore gas reserves, amidst efforts to reform its regulatory framework and improve the investment climate.

Timor-Leste has actively sought to attract foreign direct investment (FDI) since its independence in 2002, establishing legislative frameworks and institutions to support this goal. However, the investment climate is hindered by inadequate regulatory mechanisms, corruption, and limited human capacity, which slow down reform efforts. Despite these challenges, the government is focused on developing key sectors such as oil and gas, agriculture, and tourism, and has created Special Economic Zones to encourage investment.