Financial Crime World

SAO TOME AND PRINCIPE FACES CHALLENGES IN FIGHTING FINANCIAL CRIME AND TERRORISM FINANCING

The latest follow-up report on SAO Tome and Principe’s compliance with the Financial Action Task Force (FATF) recommendations has raised concerns about the country’s ability to effectively combat financial crime and terrorism financing.

Compliance Report Highlights

  • The report scored SAO Tome and Principe largely compliant in several areas, including:
    • Assessing risk and applying a risk-based approach
    • National cooperation and coordination
    • Money laundering offence
    • Confiscation and provisional measures
    • Targeted financial sanctions related to terrorism and terrorist financing
    • Correspondent banking
  • However, the country was found non-compliant in some key areas, such as:
    • Transparency and beneficial ownership of legal persons and arrangements

Deficiencies Identified

  • Weaknesses in the regulation and supervision of financial institutions, DNFBPs, and law enforcement authorities
  • Financial intelligence unit lacking in its ability to provide effective guidance and feedback to financial institutions

Consequences of Shortcomings

  • Experts say that these shortcomings create an environment conducive to financial crime and terrorism financing, which could have severe consequences for the country’s economy and national security.

FATF Recommendations

The FATF has called on SAO Tome and Principe to address these deficiencies and strengthen its AML/CT framework. The country has until the next evaluation period to demonstrate significant progress in improving its compliance with the recommendations.

STRENGTHENING AML/CT FRAMEWORK CRUCIAL FOR SAO TOME AND PRINCIPE’S ECONOMIC STABILITY

Importance of Effective AML/CFT Framework

  • The fight against financial crime and terrorism financing is a critical aspect of maintaining economic stability and preventing illicit activities.
  • In a region vulnerable to organized crime, corruption, and terrorist threats, SAO Tome and Principe’s ability to effectively combat these crimes is crucial.

Consequences of Failure to Address Deficiencies

  • Experts warn that if the country fails to address its AML/CFT shortcomings, it may face:
    • International sanctions
    • Damage to its reputation
    • Erosion of investor confidence
  • The lack of effective regulation and supervision of financial institutions could lead to a proliferation of shell companies, money laundering schemes, and terrorist financing networks.

Roadmap for Improvement

The FATF’s recommendations provide a clear roadmap for SAO Tome and Principe to strengthen its AML/CFT framework and prevent financial crime and terrorism financing. The country must take immediate action to address the deficiencies identified in the report and demonstrate its commitment to combating these crimes.