Timor-Leste Country Summary
Sanctions
No
FATF AML Deficient List
No
Terrorism
Corruption
US State ML Assessment
Criminal Markets (GI Index)
EU Tax Blacklist
Offshore Finance Center
Background Information
Anti Money Laundering
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 by the Financial Action Task Force (FATF) in 2012. According to that Evaluation, Timor-Leste was deemed Compliant for 1 and Largely Compliant for 14 of the FATF 40 + 9 Recommendations. It was Partially Compliant or Non-Compliant for 4 of the 6 Core Recommendations.
US Department of State Money Laundering assessment (INCSR)
Timor Leste was deemed a Jurisdiction of Primary Concern by the US Department of State 2017 International Narcotics Control Strategy Report (INCSR) but has not been included since. Key Findings from the last report are as follows: -
OVERVIEW
Timor-Leste is a small economy, with limited data available regarding illicit funds and limited awareness, even by stakeholders, of money laundering issues. The most prevalent source of illicit proceeds is corruption, which a recent assessment described as “endemic” in the public sector. Capacity is low in government entities that supervise, enforce, and investigate suspicious financial transactions. The government has committed to increasing that capacity, as well as increasing awareness among the public and private sectors.
In 2016, Timor-Leste published its first National Risk Assessment of Money Laundering and Terrorist Financing (NRA) and adopted a National Action Plan (NAP) to address the areas of concern identified in the NRA.
Sanctions
There are no international sanctions currently in force against this country.
Bribery & Corruption
Rating (100-Good / 0-Bad)
Transparency International Corruption Index 43
World Governance Indicator – Control of Corruption 47
Economy
The Government of Timor-Leste has welcomed foreign-investment and business-development opportunities since gaining independence in 2002. In practice the investment climate continues to be hampered by inadequate regulatory mechanisms, corruption, insufficient personnel capacity, and deficient infrastructure. The government is working to address these issues but limited human capacity and a time-consuming bureaucratic/legislative system has made progress on reform slow. Initially plagued by conflict and turmoil after independence, Timor-Leste has emerged as a peaceful and stable democracy. Peaceful changes of government and freely contested elections, including a 2022 presidential election that drew 16 candidates, demonstrated an active political climate with competing views for how to best develop an economy largely dependent on public-sector spending for growth. Timor-Leste’s desire to join the Association of Southeast Asian Nations (ASEAN) and the World Trade Organization (WTO) provides incentive to implement fiscal and economic reforms to meet regional and international norms.
After rebounding in 2021 to grow 2.9%, Timor-Leste’s economy continued to recover in 2022, growing by 3.0%. Nevertheless, per capita GDP remains below pre-pandemic levels.
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