Financial Crime World

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São Tomé and Principe: Navigating Types of Financial Compliance

In a bid to promote foreign direct investment (FDI) and economic growth, the government of São Tomé and Principe has made significant strides in improving its financial compliance landscape. The country’s small but growing economy, with a gross domestic product (GDP) of approximately $427 million, relies heavily on outside investment, with foreign donors financing around 90% of its public investment budget.

Promoting Economic Growth

According to the U.S. Department of State’s Investment Climate Statement for São Tomé and Principe, the country has taken positive steps in recent years to combat corruption and create a more open and transparent business environment. The government has introduced various measures aimed at promoting economic growth, including:

  • Introduction of Visa cards in 2021
  • Launch of the “Seal of Clean” program to boost tourism during the pandemic
  • Adoption of a modern Labor Code in 2019

Key Types of Financial Compliance

The São Tomé and Principe government has implemented several key financial compliance measures, including:

Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF)

  • Passed AML/CTF law in 2013, bringing it into compliance with international standards

Value Added Tax (VAT)

  • Enacted VAT Law in 2019 to facilitate tax collection and enforcement of the tax code

Regulation of Investment Code

  • Adopted in 2017, aiming to promote foreign investment by providing a clear framework for investors

Investment Code and Code of Fiscal Benefits and Incentives

  • Previously adopted in 2016, offering incentives to attract FDI

Challenges Ahead

While the government’s efforts to improve financial compliance are commendable, challenges remain. Foreign investors continue to face difficulties identifying viable investment opportunities due to São Tomé and Principe’s small domestic market, inadequate infrastructure, slow justice system, high cost of credit, and limited access to affordable electricity.

Conclusion

São Tomé and Principe’s commitment to improving its financial compliance landscape is a step in the right direction. By addressing these challenges and continuing to promote economic growth, the country can attract more FDI and create a more prosperous future for its citizens.