Financial Crimes on the Rise in Sao Tome and Principe, Experts Warn

Sao Tome and Principe, a small island nation off the coast of West Africa, has been plagued by financial crimes, according to a recent report from the Financial Action Task Force (FATF). The report highlights several areas where the country falls short in implementing anti-money laundering and combating financing of terrorism (AML/CFT) measures.

FATF Report Highlights

• Sao Tome and Principe is largely compliant with international standards on assessing risk and applying a risk-based approach, national cooperation and coordination, and money laundering offence.
• However, the country has room for improvement in several areas, including:
  • Confiscation and provisional measures
  • Terrorist financing offence
  • Non-profit organisations
  • Financial institution secrecy laws

Experts warn that financial crimes are becoming increasingly prevalent in emerging markets like Sao Tome and Principe, where lax regulations and limited resources can make it easier for criminals to operate undetected. The country’s financial system is heavily reliant on correspondent banking relationships, which makes it vulnerable to money laundering and terrorist financing.

Challenges Faced by Sao Tome and Principe

• Improved customer due diligence
• Record keeping
• Internal controls
• Strengthening powers of supervisors, regulation and supervision of financial institutions, and financial intelligence units
• Addressing weaknesses in financial institution secrecy laws

The FATF report serves as a wake-up call for the country’s authorities to prioritize AML/CFT reforms and protect its financial system from criminal activity.

Government Response

Sao Tome and Principe’s government has acknowledged the challenges it faces in implementing effective AML/CFT measures and has committed to addressing these issues. The central bank has also announced plans to introduce new regulations aimed at improving transparency and combating money laundering in the country’s banking sector. While this move is seen as a step in the right direction, more needs to be done to address the root causes of financial crimes in the country.

Conclusion

As the global economy becomes increasingly interconnected, it is essential that countries like Sao Tome and Principe take proactive steps to prevent financial crimes from undermining their economic stability and integrity. The FATF report highlights the need for urgent action to strengthen the country’s financial system and prevent financial crimes from taking hold.