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aML and cFT Regulations by Country in Timor

The Democratic Republic of Timor has implemented various regulations to combat money laundering (aML) and terrorist financing (cFT). In this report, we provide an overview of the aML and cFT regulations in Timor.

Risk-Based Approach

Timor’s risk assessment framework is based on the International Monetary Fund’s (IMF) Financial Sector Assessment Program. The country applies a risk-based approach to assess the risks associated with financial institutions, designated non-financial businesses and professions (DNFBPs), and other sectors.

National Cooperation and Coordination

The Central Bank of Timor and the Ministry of Finance are responsible for coordinating efforts to combat money laundering and terrorist financing. The two institutions work closely together to ensure effective implementation of aML and cFT regulations.

Money Laundering Offence

Money laundering is punishable by up to 10 years imprisonment in Timor, according to Article 2 of Law No. 6/2009 on Combating Money Laundering and Financing of Terrorism.

Confiscation and Provisional Measures

Timor’s law allows for confiscation of proceeds from money laundering and terrorist financing offenses. The government can also impose provisional measures such as freezing of assets and restriction on transactions.

Terrorist Financing Offence

Terrorist financing is punishable by up to 15 years imprisonment in Timor, according to Article 3 of Law No. 6/2009 on Combating Money Laundering and Financing of Terrorism.

Timor has implemented targeted financial sanctions against individuals and entities involved in terrorist financing or supporting terrorism.

Non-Profit Organisations

Non-profit organizations operating in Timor are required to comply with aML and cFT regulations, including customer due diligence and reporting of suspicious transactions.

Financial Institution Secrecy Laws

Timor’s banking secrecy laws allow for the sharing of information between financial institutions and law enforcement agencies to combat money laundering and terrorist financing.

Customer Due Diligence

Financial institutions in Timor are required to conduct customer due diligence on all customers, including Politically Exposed Persons (PEPs), and report suspicious transactions.

Record Keeping

Financial institutions in Timor are required to maintain accurate records of all financial transactions and keep them for at least 5 years.

Politically Exposed Persons

Timor’s law requires financial institutions to conduct enhanced due diligence on PEPs and their family members.

Correspondent Banking

Timor has implemented regulations to ensure that correspondent banking relationships are conducted in a secure and transparent manner.

Money or Value Transfer Services

Companies providing money or value transfer services in Timor are required to comply with aML and cFT regulations, including customer due diligence and reporting of suspicious transactions.

New Technologies

Timor is working to implement new technologies to improve its aML and cFT regime, including the use of artificial intelligence and machine learning.

Wire Transfers

Financial institutions in Timor are required to report wire transfers above $10,000.

Reliance on Third Parties

Timor’s law allows for reliance on third-party due diligence reports, but financial institutions must ensure that these reports meet international standards.

Internal Controls and Foreign Branches and Subsidiaries

Financial institutions in Timor are required to maintain internal controls and report any suspicious transactions to the authorities.

International Cooperation

Timor cooperates with international organizations, including the Financial Action Task Force (FATF), to combat money laundering and terrorist financing.