Financial Crime World

Lesotho Financial Action Task Force (FATF) Review: Country Scores High on Technical Compliance but Faces Challenges

The Financial Action Task Force (FATF) has released its latest assessment of Lesotho’s implementation of anti-money laundering and combating the financing of terrorism (AML/CFT) measures. The review shows that while Lesotho scored high in several areas, it faces challenges in others.

Technical Compliance Ratings

Lesotho received high ratings for technical compliance in the following areas:

  • Assessing risk and applying a risk-based approach
  • National cooperation and coordination
  • Money laundering offense
  • Confiscation and provisional measures
  • Terrorist financing offense
  • Targeted financial sanctions related to terrorism and terrorist financing
  • Targeted financial sanctions related to proliferation

Areas of Improvement

However, Lesotho was found:

  • Partially compliant in areas such as:
    • Money or value transfer services
    • Correspondent banking
    • DNFBPs’ customer due diligence
    • Regulation and supervision of financial institutions
  • Non-compliant in several areas, including:
    • Transparency and beneficial ownership of legal persons
    • Transparency and beneficial ownership of legal arrangements
    • DNFBPs’ other measures
    • Regulation and supervision of DNFBPs

Progress and Praise

The FATF commended Lesotho for:

  • Progress in implementing AML/CFT measures, particularly in relation to financial institution secrecy laws and customer due diligence
  • Efforts to improve transparency and beneficial ownership of legal persons and arrangements

Shortcomings and Recommendations

However, the report highlighted several areas where Lesotho needs to improve, including:

  • Strengthening its regulation and supervision of DNFBPs
  • Improving its customer due diligence requirements for money or value transfer services
  • Enhancing its transparency and beneficial ownership regimes

The FATF has called on Lesotho to address these shortcomings and implement the necessary reforms to ensure that it is fully compliant with international AML/CFT standards.

Conclusion

Lesotho’s FATF assessment comes at a critical time, as the country seeks to strengthen its financial sector and promote economic growth. The government must take immediate action to address the shortcomings identified by the FATF and implement the necessary reforms to ensure that its financial system is robust and effective in preventing money laundering and terrorist financing.

By addressing these challenges, Lesotho can demonstrate its ability to prevent the misuse of its financial systems for illegal activities, including money laundering and terrorist financing. This will help to maintain a stable and secure financial sector, which is essential for promoting economic growth and development.