FATF status

Timor-Leste 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 Timor Leste was undertaken in 2024. According to that Evaluation, Timor Leste was deemed Compliant for 1 and Largely Compliant for 21 of the FATF 40 Recommendations. It was deemed Highly Effective for 0 and Substantially Effective for 0 of the Effectiveness ratings.

Timor-Leste ranks 70 out of 180 countries in Transparency International's 2023 Corruption Perceptions Index, reflecting ongoing challenges with corruption despite the establishment of the Anti-Corruption Commission (CAC) in 2010. High-profile cases have emerged, including the convictions of former officials for procurement fraud, and recent allegations against current officials, with investigations ongoing. The Law on Measures to Prevent and Fight Corruption, effective since late 2020, aims to address both public and private sector corruption, while the government encourages ethical practices and protects NGOs reporting on corruption.

Timor-Leste's economy has faced challenges since gaining independence in 2002, including a contraction in GDP per capita by -21.7% from 2021 to 2023, and a weak private sector heavily reliant on government contracts. The agriculture sector contributes about 15% to GDP, while oil and gas production remains the largest economic driver, although the depletion of existing fields poses future risks. The government is actively seeking foreign investment and partnerships to develop its natural resources and improve infrastructure, despite ongoing issues with regulatory mechanisms and corruption.

Timor-Leste has actively sought foreign direct investment (FDI) since its independence in 2002, establishing a National Strategic Development Plan to support non-petroleum economic growth. However, the investment climate is challenged by inadequate regulatory frameworks, corruption, and limited infrastructure, which hinder progress despite government efforts to improve the business environment. The establishment of TradeInvest as a one-stop-shop for investors and recent membership in the World Trade Organization (WTO) reflect the government's commitment to enhancing the investment landscape.