FATF Status

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

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Lesotho was undertaken in 2023. According to that Evaluation, Lesotho was deemed Compliant for 7 and Largely Compliant for 12 of the FATF 40 Recommendations. It was deemed Highly Effective for 0 and Substantially Effective for 0 of the Effectiveness ratings.

Lesotho has established a framework to combat corruption through various laws and regulations, including the Prevention of Corruption and Economic Offences Act, which imposes penalties for corrupt practices and mandates financial disclosures for public officials. Despite these efforts, corruption remains a significant issue, particularly in government procurement and licensing, with the Directorate on Corruption and Economic Offences (DCEO) citing resource limitations as a barrier to effective enforcement. The DCEO encourages companies to adopt internal controls to prevent bribery, while foreign investors have identified corruption as a major obstacle to foreign direct investment.

Lesotho's economy is characterized by a significant reliance on foreign direct investment (FDI), particularly in sectors such as manufacturing, mining, agriculture, and construction. Despite efforts by the government to improve the business environment and attract investment, challenges such as the absence of clear investment policies, high labor costs, and environmental issues like droughts hinder economic growth. The government is focused on job creation and market diversification, aiming to leverage its natural resources for renewable energy development.

Lesotho's investment climate is characterized by the government's openness to foreign direct investment (FDI) and efforts to improve the business environment, particularly in licensing and registration processes. However, the lack of comprehensive investment policies and the introduction of regulations protecting local entrepreneurs in certain sectors pose challenges for foreign investors. Despite these hurdles, the government is actively refining its services for investors and promoting sectors like renewable energy, which presents opportunities for growth.