FATF status

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

Compliance with FATF Recommendations

Micronesia has not yet undertaken a Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards.

The Federated States of Micronesia (FSM) has laws against corruption, with penalties for corrupt acts, and the National Office of the Public Auditor plays a key role in anti-corruption efforts. Despite these measures, corruption remains a significant issue, with reports of bribery among government officials, including a notable case involving a former transportation official who was convicted for laundering bribe money. The FSM has not ratified major international anti-corruption conventions, and while state prosecutors handle corruption cases, there is no dedicated agency for combating corruption, leading to concerns about enforcement and conflicts of interest.

The Federated States of Micronesia (FSM) is a lower middle-income nation with a population of about 71,000, experiencing a significant decline since 2010. The economy is heavily reliant on commercial fishing and U.S. financial assistance, with over 50% of national income derived from Compact of Free Association payments and donor transfers. Despite a slight GDP growth in 2022, the FSM faces challenges such as low foreign direct investment, a subsistence economy in rural areas, and a trade deficit, while government employment remains a primary source of income for many citizens.

The investment climate in the Federated States of Micronesia (FSM) is hindered by significant structural impediments, including prohibitions on foreign ownership of land and businesses in certain sectors, a complex regulatory environment requiring multiple approvals, and weak enforcement of contracts and investor rights. Foreign direct investment (FDI) is almost nonexistent due to these challenges, alongside limited access to financing and a lack of infrastructure. Recent amendments in Pohnpei State have attempted to reduce barriers for foreign investment, but overall, the FSM remains a challenging environment for potential investors.