Financial Crime World

Lesotho Embraces Risk-Based Approach to Anti-Money Laundering

The Kingdom of Lesotho has made significant strides in implementing the technical requirements of the Financial Action Task Force (FATF) Recommendations, with a risk-based approach to anti-money laundering (AML) at its core. The Benin Follow-Up Report 2023 highlights Lesotho’s high level of compliance in several areas, including:

  • Assessing risk and applying a risk-based approach
  • National cooperation and coordination
  • Financial intelligence units

Compliance Rating

Lesotho received a “largely compliant” rating for the following requirements:

  • R.1: Customer due diligence and ongoing monitoring
  • R.2: Identifying beneficial owners
  • R.6: Monitoring transactions
  • R.7: Reporting suspicious transactions
  • R.11: Customer identification
  • R.13: Record-keeping
  • R.17: Cash transaction reporting
  • R.18: Currency transaction reporting
  • R.20: Wire transfer reporting
  • R.21: Travel rule reporting
  • R.23: Suspicious transaction reporting
  • R.27: Customer identification for correspondent banking relationships
  • R.30: Customer identification for cash transactions
  • R.31: Cash transaction reporting
  • R.33: Currency transaction reporting
  • R.35: Wire transfer reporting
  • R.36: Travel rule reporting
  • R.37: Suspicious transaction reporting
  • R.38: Confidentiality of information
  • R.40: International cooperation

Areas for Improvement

However, Lesotho faced challenges in the following areas:

  • Confiscation and provisional measures (R.4)
  • Terrorist financing offence (R.5)
  • Non-profit organisations (R.8)
  • Financial institution secrecy laws (R.9)
  • Customer due diligence (R.10)
  • Transparency and beneficial ownership of legal persons and arrangements (R.24)

Progress in Implementing AML Measures

Despite these challenges, Lesotho has made significant progress in implementing AML measures, including:

  • Establishing a risk-based approach to identify high-risk customers and transactions
  • Improving cooperation with international partners

Financial Intelligence Unit

The report notes that Lesotho’s financial intelligence unit plays a crucial role in identifying and reporting suspicious transactions. The country has taken steps to improve its cooperation with international partners.

Expected Outcomes

Lesotho’s efforts to implement a risk-based approach to AML are expected to enhance its ability to combat money laundering and terrorist financing, and strengthen its position as a responsible member of the global financial community.