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 and has seen some senior officials convicted under the FSM Financial Management Act, particularly for procurement fraud. Despite these laws, the extent of bribery among government officials remains unclear but is believed to be common, with ongoing prosecutions in Pohnpei and Yap States. The FSM lacks a dedicated agency to combat corruption, relying instead on state prosecutors and the Public Auditor, while no non-governmental organizations monitor corruption in the region.

The Federated States of Micronesia (FSM) is a lower middle-income island nation with a population of 105,544, primarily relying on commercial fishing and government employment for its economy. The country has seen no growth in its Gross Domestic Income over the past decade, and its economy is heavily dependent on over USD100 million in annual funding from the U.S. under a Compact of Free Association, which is set to change in 2023, raising concerns about future fiscal stability.

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, a complicated registration process requiring multiple approvals, and weak enforcement of contracts and investor rights. Foreign direct investment (FDI) is nearly nonexistent, and while recent legislative changes in Pohnpei State aimed to ease some restrictions, the overall environment remains challenging for potential investors. Additionally, the lack of a dedicated investment promotion agency and the high cost of doing business due to remoteness further deter foreign investment.