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 that emphasizes service to 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 one of the smallest globally, primarily driven by agriculture, forestry, tourism, and hydroelectric power sales to India, with significant growth attributed to investments in hydropower infrastructure. Agriculture employs over half the population, focusing on subsistence farming, while the industrial sector is developing with an emphasis on cement and wood products. The ngultrum, Bhutan's currency, is pegged to the Indian rupee, facilitating trade with India, its largest trading partner.

Bhutan's investment climate is improving as the government actively encourages foreign investment, particularly in the hydropower and technology sectors. Initiatives like the Thimphu TechPark aim to foster startups and innovation, while free trade agreements with India enhance its attractiveness to investors. Despite challenges such as limited infrastructure and a small domestic market, Bhutan's commitment to sustainable development and economic diversification presents significant opportunities for growth.