Financial Crime World

Compliance and Risk Management Practices in Sao Tome and Principe

The Financial Action Task Force (FATF) has released a report assessing the compliance and risk management practices of Sao Tome and Principe with international standards for combating money laundering and terrorist financing. The report highlights areas where the country is largely compliant, partially compliant, or non-compliant.

Ratings

Sao Tome and Principe received the following ratings:

  • Largely Compliant (LC) in:

    • Assessing risk and applying a risk-based approach (R.1)
    • National cooperation and coordination (R.2)
    • Money laundering offence (R.3)
    • Confiscation and provisional measures (R.4)
    • Terrorist financing offence (R.5)
    • Targeted financial sanctions related to terrorism and terrorist financing (R.6)
    • Targeted financial sanctions related to proliferation (R.7)

  • Partially Compliant (PC) in:

    • Customer due diligence (R.10)
    • Record keeping (R.11)
    • Politically exposed persons (R.12)
    • Correspondent banking (R.13)
    • Money or value transfer services (R.14)
    • New technologies (R.15)
    • Wire transfers (R.16)
    • Internal controls and foreign branches and subsidiaries (R.18)
    • Reporting of suspicious transactions (R.20)
    • Transparency and beneficial ownership of legal arrangements (R.25)
    • Regulation and supervision of financial institutions (R.26)
    • Cash couriers (R.32)

Non-Compliant Areas

Sao Tome and Principe received a rating of Non-Compliant (NC) in:

  • Non-profit organisations (R.8)
  • Financial institution secrecy laws (R.9)
  • DNFBPs: Customer due diligence (R.22)
  • DNFBPs: Other measures (R.23)
  • Transparency and beneficial ownership of legal persons (R.24)
  • Regulation and supervision of DNFBPs (R.28)
  • International instruments (R.36)

Compliance Challenges

The FATF report highlights several areas where Sao Tome and Principe needs to improve its compliance with international standards, including:

  • Strengthening financial institution secrecy laws
  • Improving customer due diligence
  • Enhancing internal controls and supervision of financial institutions
  • Increasing transparency and beneficial ownership of legal persons

Way Forward

To address these challenges, Sao Tome and Principe must take concrete steps to strengthen its anti-money laundering and combating financing of terrorism (AML/CFT) framework. This includes:

  • Implementing new regulations and guidelines
  • Enhancing coordination between different authorities
  • Increasing public awareness about the risks associated with money laundering and terrorist financing

Conclusion

While Sao Tome and Principe has made progress in implementing FATF recommendations, it still faces challenges in its compliance with international standards for combating money laundering and terrorist financing. The country must continue to work towards strengthening its AML/CFT framework to prevent the misuse of its financial system by criminals and terrorists.