Financial Crime World

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Lesotho’s Battle Against Money Laundering: A Look at the Nation’s AML Laws

As Lesotho continues to strengthen its financial sector, the country has implemented a range of Anti-Money Laundering (AML) laws and regulations aimed at curbing money laundering and terrorist financing. These laws are designed to ensure that financial institutions and other organizations in the country comply with international standards and best practices.

Key Legislation

One of the key pieces of legislation is the AML Amendment Regulations, 2019, which sets out the requirements for financial institutions to implement effective AML/CFT (Combating the Financing of Terrorism) controls. The regulations require financial institutions to:

  • Conduct customer due diligence
  • Monitor transactions
  • Report suspicious transactions to the Financial Intelligence Unit

Other Relevant Laws and Regulations

In addition to the AML Amendment Regulations, other laws and regulations have been introduced to strengthen Lesotho’s financial sector, including:

  • Exchange Control Regulations, 1989, which regulate foreign exchange dealings in the country
  • Financial Institutions Regulations, 2015, which set out the requirements for financial institutions to operate in Lesotho
  • Banking Act, No. 3 of 2024, which regulates banking activities in the country

Notable Regulations

Other notable regulations include:

  • Financial Consumer Protection (Disclosure of Credit Information) Regulations, 2023, which require financial institutions to disclose credit information to customers
  • No. 87 Money Laundering (Administrative Sanctions) Rules, 2023, which provide for administrative sanctions for non-compliance with AML/CFT requirements
  • Financial Institutions (Computation of Capital Charge for Credit, Operational and Market Risks) Regulations, 2023, which set out the requirements for financial institutions to compute their capital charges

Insurance Sector Impact

Lesotho’s insurance sector has also been impacted by the country’s efforts to combat money laundering. The following regulations have been introduced:

  • Insurance (Capital, Solvency and Reserves Requirements for Insurers) Regulations, 2016, which require insurers to maintain minimum capital, solvency, and reserves requirements
  • Financial Institutions (Licensing Requirements) Regulations, 2016, which regulate the licensing of insurance intermediaries

Guidelines and Circulars

In addition to these regulations, Lesotho has also introduced a range of guidelines and circulars aimed at promoting good practice in the financial sector, including:

  • Financial Institutions (Know Your Customer) Guidelines, 2021, which provide guidance on customer due diligence
  • Financial Institutions (Payment of Expenses for Examination) Regulations, 2019, which set out the requirements for financial institutions to pay expenses related to examinations

Conclusion

Overall, Lesotho’s AML laws and regulations demonstrate the country’s commitment to combating money laundering and terrorist financing. By implementing these measures, Lesotho aims to promote a safe and stable financial system that benefits both local and international stakeholders.