Financial Crime World

Lesotho Fails to Coordinate Efforts Against Money Laundering and Terrorist Financing

Lack of Coordination Hinders Progress

A recent report has revealed that Lesotho’s efforts to combat money laundering (ML) and terrorist financing (TF) have been marred by a lack of coordination. The report highlights several weaknesses in the country’s Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) regime, which impede its effectiveness.

Financial Intelligence Unit (FIU)

  • Produces reasonably good financial intelligence on ML
  • However, has not developed any related to TF
  • Lacks cooperation from non-bank financial institutions (NBFIs), resulting in negligible Suspicious Transaction Reports (STRs)

Law Enforcement Agencies (LEAs)

  • Reactive rather than proactive in seeking financial intelligence from the FIU to support investigations or trace and identify assets linked to ML and other financial crimes
  • No capacity within the law enforcement agency (LMPS) to investigate or disrupt TF offenses

Asset Recovery Efforts

  • Not reflective of the prevailing risk profile of Lesotho
  • No implementation of targeted financial sanctions without delay
  • Lacks a proper legal and institutional framework for combating TF, including proliferation financing (PF)
  • Limited understanding of the beneficial owner (BO) concept among accountable institutions
  • Often considers the majority shareholder to be the same as the BO, except foreign-owned banks

Other Weaknesses in AML/CFT Regime

  • Lack of adequate measures to implement targeted financial sanctions for TF and PF
  • Deficiencies affecting the TF offense
  • Inadequate legal framework for corporate and partnership structures

Recommendations

The report recommends that Lesotho take immediate action to address these weaknesses and improve its AML/CFT regime.

Government Response

In response to the report, a spokesperson for the government of Lesotho stated that they are committed to strengthening their AML/CFT regime and will work to address the deficiencies highlighted in the report.