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 Directorate on Corruption and Economic Offences' (DCEO) 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 also joined several international anti-corruption conventions, although challenges persist in effectively implementing these laws.

Lesotho's economy is characterized by a significant reliance on sectors such as manufacturing, mining, agriculture, and construction, but faces challenges including high labor costs, environmental impacts from severe weather, and community conflicts in mining. The government is actively seeking foreign direct investment (FDI) to bolster job creation and market diversification, yet the lack of clear investment policies and regulatory red tape poses obstacles for potential investors. Despite these challenges, Lesotho benefits from lower operational costs compared to neighboring countries and aims to develop its renewable energy sector.

Lesotho's investment climate is characterized by a government eager to attract foreign direct investment (FDI) to bolster job creation and market diversification. Despite recent improvements in the business environment, such as streamlined licensing and registration processes, the lack of comprehensive investment policies poses challenges for foreign investors. Additionally, while sectors like manufacturing and mining have historically drawn investment, issues such as community conflicts and regulatory red tape continue to hinder growth.