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 was amended in 2020 to enhance the DCEO's investigative powers. Despite these efforts, corruption remains a significant issue, particularly in government procurement and licensing, with many officials acting with impunity due to resource constraints faced by the DCEO. The country has made international commitments to anti-corruption conventions, yet challenges persist in effectively implementing these measures.

Lesotho's economy is characterized by a significant reliance on sectors such as manufacturing, mining, agriculture, and construction, with the government actively seeking foreign direct investment (FDI) to bolster job creation and market diversification. However, challenges such as high labor costs, environmental impacts from severe weather, and a lack of comprehensive investment policies hinder growth and investor confidence. Despite these obstacles, Lesotho benefits from lower operational costs compared to neighboring countries and aims to leverage its renewable energy resources to become a net exporter.

Lesotho's investment climate is characterized by the government's openness to foreign direct investment (FDI) and recent efforts to enhance the business environment, particularly in licensing and infrastructure. However, the lack of comprehensive investment policies poses challenges for investors, alongside issues such as corruption, labor costs, and environmental impacts. Despite these hurdles, Lesotho offers advantages like access to regional markets and lower operational costs, particularly in the renewable energy sector.