Financial Crime World

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Lesotho’s Fight Against Money Laundering and Terrorist Financing Remains Incomplete

Despite efforts to strengthen its anti-money laundering (AML) and combating the financing of terrorism (CFT) measures, Lesotho still faces significant challenges in preventing and detecting these crimes.

Financial Intelligence Unit Not Effectively Utilized

According to a recent report by the country’s authorities, financial intelligence produced by the Financial Intelligence Unit (FIU) is not being effectively used by law enforcement agencies (LEAs) to support their investigations or trace assets linked to money laundering and other financial crimes. This highlights a major gap in Lesotho’s efforts to combat financial crimes.

Lack of Capacity to Investigate Terrorist Financing

The report also notes that there is no capacity in the country’s law enforcement agency to investigate or disrupt terrorist financing offenses, leaving Lesotho vulnerable to these types of crimes.

The report highlights that Lesotho’s TF risks are closely linked to South Africa, and that the country is vulnerable to illegal cross-border movement of cash due to inadequate controls. This emphasizes the need for stronger cooperation with neighboring countries to combat financial crimes.

Additionally, the authorities have not developed any financial intelligence related to suspected terrorist financing, and there is no implementation of targeted financial sanctions for both TF and proliferation financing (PF). Lesotho also lacks a proper legal and institutional framework to deal with PF, leaving it vulnerable to these types of crimes.

No Mechanism to Identify Non-Profit Organizations

The report notes that there is no mechanism in place to identify non-profit organizations (NPOs) that may be abused for TF. This highlights the need for stronger regulation and oversight of NPOs to prevent their abuse for financial crimes.

Understanding of ML/TF Risks Varies Across Institutions

The authorities have acknowledged that Lesotho’s understanding of ML/TF risks and AML/CFT obligations varies across financial institutions and designated non-financial businesses and professions (DNFBPs). However, foreign banks and cross-border money transfer service providers have a good understanding of these risks.

Conclusion and Recommendations

While Lesotho has made some progress in strengthening its AML/CFT measures since the adoption of the first Mutual Evaluation Report (MER) in 2011, significant TC shortcomings remain. The authorities are urged to address these deficiencies and strengthen their efforts to combat money laundering and terrorist financing.

Sources:

  • Lesotho’s Financial Intelligence Unit
  • National Revenue Authority (NRA)
  • Anti-Money Laundering and Combating the Financing of Terrorism Act (AML/CFT Act)

Note: This article is a rewritten version of the original report, presented in a format that resembles a news article.