Border Movement of Currency Raises Concerns in Timor-Leste

The movement of currency across borders has raised concerns among customs officials in Timor- Leste. Since 2002, they have made three cash seizures, highlighting the need for improved training and standards to maintain professional confidentiality.

Current Challenges

There is currently no arrangement in place for coordinated exchange of information between domestic agencies or with other countries regarding cross-border declarations and cash seizures. This lack of coordination raises concerns about the effectiveness of anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations.

Regulatory Gaps

The report highlights several regulatory gaps, including:

• Inadequate fines: The fines for violating AML/CFT rules are seen as inadequate, with only two sanctions imposed by the Bank of Timor-Leste (BCTL) since its establishment.
• Lack of regulation: The informal remittance sector continues to operate without regulation. The BCTL is finalizing a Public Instruction on Money Transfer Operators (MTOs) to address this gap.
• Low rate of suspicious transaction reports: Financial institutions have submitted only 20 suspicious transaction reports prior to the enactment of the new AML/CFT law, and none since its passage.

Recommendations

To address these concerns, the report recommends:

• Improved training and standards: Customs officials need improved training and standards in maintaining professional confidentiality.
• Increased cooperation: Domestic agencies and international authorities should increase their cooperation to combat money laundering and terrorist financing.
• Strengthened regulations: AML/CFT regulations and enforcement measures should be strengthened to prevent violations.
• Regulation of informal remittance sector: The informal remittance sector should be regulated to ensure compliance with AML/CFT rules.
• Adequate resources: The BCTL needs adequate human and technical resources to effectively implement the new regime.

Key Concerns

• Low rate of suspicious transaction reports submitted by financial institutions
• Inadequate fines for violating AML/CFT rules
• Lack of coordination between domestic agencies and international authorities
• Regulatory gap in the informal remittance sector
• Limited resources available to the BCTL