Financial Crime World

LESOTHO: Financial Action Task Force (FATF) Undertakes Mutual Evaluation to Combat Money Laundering and Terrorist Financing

In a bid to strengthen its anti-money laundering (AML) and counter-terrorist financing (CFT) measures, Lesotho has undergone a mutual evaluation by the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), a regional body of the Financial Action Task Force (FATF).

Background

The FATF is an inter-governmental organization that sets standards for combating money laundering, terrorist financing, and other related threats to the integrity of the international financial system. The ESAAMLG is responsible for evaluating the implementation of AML/CFT measures in member countries, including Lesotho.

Mutual Evaluation Report

According to the mutual evaluation report published on the ESAAMLG website, Lesotho has made significant progress in implementing AML/CFT measures since its previous assessment. However, there are still some areas that require improvement, particularly in relation to the effectiveness of its financial intelligence unit and the adequacy of its regulatory framework for the financial sector.

Recommendations

The FATF has recommended that Lesotho strengthen its AML/CFT regime by:

  • Improving Risk-Based Approach: Strengthening its risk-based approach to supervision and enforcement.
  • Enhancing Customer Due Diligence: Requiring financial institutions to conduct more thorough checks on customers and their beneficial owners.
  • Increasing Transparency: Introducing a public register of company ownership to increase transparency in the beneficial ownership of companies.
  • Strengthening Regulatory Framework: Improving the licensing and supervision of financial institutions, and enhancing oversight of their activities.

Key Findings

The mutual evaluation report highlights several key findings and recommendations for Lesotho, including:

  • Financial Intelligence Unit (FIU): Improving the effectiveness of the FIU by enhancing its access to financial information and increasing its capacity to analyze data.
  • Regulatory Framework: Strengthening the regulatory framework for the financial sector by improving licensing and supervision of financial institutions.

Next Steps

Lesotho has committed to implementing these recommendations and improving its AML/CFT regime. The country’s efforts will be closely monitored by the ESAAMLG and the FATF, and Lesotho will undergo another mutual evaluation in the future to assess its progress.

Conclusion

The FATF’s mutual evaluation process is designed to help countries strengthen their AML/CFT regimes and combat money laundering and terrorist financing. The process involves an assessment of a country’s laws, regulations, and practices related to AML/CFT, as well as an analysis of its effectiveness in implementing these measures.