FATF Status

Bhutan is not on the FATF List of Countries that have been identified as having strategic AML deficiencies

Compliance with FATF Recommendations

The last follow-up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Bhutan was undertaken in 2023. According to that Evaluation, Bhutan was deemed Compliant for 7 and Largely Compliant for 26 of the FATF 40 Recommendations. It was deemed Highly Effective for 0 and Substantially Effective for 0 of the Effectiveness & Technical Compliance ratings.

Corruption is relatively low in Bhutan compared to other South Asian countries, aided by a civil service ethos focused on serving the state and the king. Despite this, the public procurement sector faces risks due to favoritism. The Anti-Corruption Act addresses various forms of corruption, and the government generally enforces these regulations effectively.

Bhutan's economy is primarily driven by agriculture, forestry, tourism, and hydroelectric power sales to India, with agriculture serving as the main livelihood for over half of the population. Despite being one of the smallest economies globally, Bhutan has seen rapid growth, particularly from hydropower investments, which have become its largest export. The country emphasizes sustainable economic growth through its unique Gross National Happiness approach, while also facing challenges such as limited infrastructure and reliance on Indian financial support.

Bhutan's investment climate is improving, driven by government initiatives aimed at attracting foreign investment, particularly in the hydropower and technology sectors. The establishment of a free trade agreement with India has facilitated easier access for Bhutanese goods and services in the Indian market, although challenges such as limited infrastructure and reliance on Indian financial support persist.