Timor-Leste’s Cash Seizures and Currency Movement Under Scrutiny

Dili, Timor-Leste - A Concerning Trend Emerges

In recent years, the customs staff in Timor-Leste has seized cash three times since 2002, sparking concerns about the lack of coordination between domestic agencies and other countries regarding cross-border declarations and cash seizures. This trend highlights the need for improved cooperation and effective implementation of anti-money laundering (AML) and combating the financing of terrorism (CFT) measures.

Issues with Coordination and Regulation

• Lack of Coordination: Copies of declaration forms will be shared with the Financial Intelligence Unit (FIU) immediately, but critics argue that this is not enough. The fines for violating exportation/importation rules are too lenient, with only two sanctions imposed by the Bank of Timor-Leste (BCTL) for non-compliance.
• Insufficient Regulation: The informal remittance sector continues to operate without regulation, despite Article 28 of the AML/CFT Law requiring their registration. The BCTL is finalizing a Public Instruction on Money Transfer Operators (MTOs) to address this regulatory gap.

Challenges in Implementing AML/CFT Regime

• Insufficient Resources: The BCTL has been criticized for lacking adequate human and technical resources to effectively implement the new AML/CFT regime. The agency has conducted six examinations on AML/CFT compliance, but only two sanctions have been imposed.
• Decreased Suspicious Transaction Reports: The number of suspicious transaction reports (STRs) submitted has decreased since the passage of the new AML/CFT Law.

Recommendations

• Strengthen Coordination: Improve coordination between domestic agencies and other countries regarding cross-border declarations and cash seizures.
• Increase Fines: Increase fines for violating exportation/importation rules to deter non-compliance.
• Provide Adequate Resources: Provide adequate human and technical resources to the BCTL to ensure effective implementation of the AML/CFT regime.
• Regulate Informal Remittance Sector: Regulate the informal remittance sector to prevent money laundering and terrorist financing.
• Enhance Training and Capacity Building: Enhance training and capacity building for customs staff and other officials to improve their ability to detect and report suspicious transactions.

By implementing these recommendations, Timor-Leste can strengthen its efforts to combat money laundering and terrorist financing, ensuring a safer financial environment for its citizens.