Financial Crime World

Financial Institutions and Anti-Money Laundering Laws in Sao Tome and Principe Face Scrutiny

Sao Tome and Principe’s financial institutions have been found to be largely compliant with anti-money laundering (AML) laws, but also face significant challenges in implementing certain technical requirements. The country received ratings from the Financial Action Task Force (FATF), which assesses countries’ efforts to combat money laundering and terrorist financing.

Compliance and Challenges

According to the report, Sao Tome and Principe is largely compliant in several areas:

  • Assessing risk and applying a risk-based approach (R.1)
  • National cooperation and coordination (R.2)
  • Targeted financial sanctions related to terrorism and terrorist financing (R.6)
  • Preventing the misuse of non-profit organizations (R.8) and correspondent banking relationships (R.13)

However, Sao Tome and Principe faces challenges in other areas:

  • Partial compliance with regards to confiscation and provisional measures (R.4), terrorist financing offence (R.5), and customer due diligence (R.10)
  • Needs improvement in implementing measures related to transparency and beneficial ownership of legal persons and arrangements (R.24-25)

Internal Controls and Supervision

The report highlights that Sao Tome and Principe’s financial institutions have a good level of internal controls, and foreign branches and subsidiaries are subject to effective supervision (R.18). Additionally:

  • The country has made progress in establishing a financial intelligence unit (R.29)
  • Has powers for supervisors (R.27), law enforcement agencies (R.31), and investigative authorities (R.30)

Challenges and Recommendations

Despite advancements, Sao Tome and Principe still faces challenges in implementing certain technical requirements:

  • New technologies (R.15)
  • Wire transfers (R.16)
  • DNFBPs (R.22)

The country also needs improvement in:

  • Reporting suspicious transactions (R.20)
  • Regulating and supervising financial institutions and DNFBPs (R.26-28)

Conclusion

While Sao Tome and Principe has made progress in implementing anti-money laundering laws, it still faces significant challenges in certain areas. To address these challenges, the country needs to strengthen its technical compliance with FATF recommendations and enhance its cooperation with international partners.