Timor-Leste’s Anti-Money Laundering and Counter-Terrorist Financing Policies: Strengthening the Regime

In the complex financial landscape of the Asia-Pacific region, Timor-Leste, a member of the Asia/Pacific Group on Money Laundering (APG), has made strides in enhancing its Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) policies. Here’s a look at the current state of Timor-Leste’s AML/CFT regime based on a recent mutual evaluation report by the APG, conducted in 2012.

Timor-Leste’s Progress in AML/CFT Regime

Timor-Leste has criminalized money laundering under Article 313 of its Penal Code and terrorist financing under Article 133. However, significant developments came in 2009 when Law No. 17/2011 was passed, deepening the country’s AML/CFT measures. The law enabled preventative measures like customer due diligence (CDD) and suspicious transaction reporting (STR), which paved the way for establishing a Financial Intelligence Unit (FIU) within the Central Bank of Timor-Leste (BCTL).

Ongoing Establishment of Financial Intelligence Unit (FIU)

Although this progress offers a solid foundation, the practical establishment of the FIU and implementation of new regulatory requirements are still underway. Currently, the BCTL, serving as the interim FIU since 2008, receives and disseminates STRs from banks to the Public Prosecutor’s Office (PPO) without any further analysis. With the new regime in place, it’s anticipated that the new FIU will offer more comprehensive analysis, possibly leading to membership in the Egmont Group.

Developing a Comprehensive National AML/CFT Strategy

Timor-Leste is also proceeding with creating a comprehensive National AML/CFT Strategy to foster implementation of the new regime and provide additional training for supervisors.

Challenges and Future Plans

Despite these advancements, Timor-Leste remains vulnerable to organized crime, smuggling, terrorist activities, and other illicit financial activities. To confront these issues, the country plans to conduct a national risk assessment and enhance cooperation and coordination between domestic agencies and neighboring countries.

These developments illustrate Timor-Leste’s ongoing commitment to countering financial threats and strengthening its financial infrastructure. Although it’s still early to assess the effectiveness of the new regime, Timor-Leste’s progress marks an essential step towards maintaining a robust financial system within the APG region.

Criminalization of AML and CTF activities
Significant progress in defining AML and CTF offenses
Enhancements in implementing preventative measures
Establishment of the Financial Intelligence Unit (FIU) within the Central Bank of Timor-Leste (BCTL)
Development of a National AML/CFT Strategy
Addressing vulnerabilities through risk assessments and improved coordination