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

It should be noted that the new style FATF Mutual Evaluation has not yet been undertaken.

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Timor-Leste was undertaken by the Financial Action Task Force (FATF) in 2012. According to that Evaluation, Timor-Leste was deemed Compliant for 1 and Largely Compliant for 14 of the FATF 40 + 9 Recommendations. It was Partially Compliant or Non-Compliant for 4 of the 6 Core Recommendations.

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. Significant cases have emerged, including the convictions of former officials for procurement fraud and recent accusations against current officials, with investigations ongoing. The Law on Measures to Prevent and Fight Corruption, enacted in 2020, aims to address both public and private sector offenses, while the government promotes ethical conduct within private companies.

Timor-Leste's economy has faced challenges since its independence in 2002, including a contraction in GDP per capita growth of -21.7 percent from 2021 to 2023. The economy is heavily reliant on public-sector spending, with a weak private sector primarily dependent on government contracts, while oil and gas production remains the largest contributor to GDP despite depletion of existing fields. The government is actively seeking foreign investment and partnerships to develop its natural resources and improve infrastructure, but issues such as corruption and inadequate regulatory mechanisms hinder progress.

Timor-Leste has an investment climate that is open to foreign direct investment (FDI), with the government actively seeking to attract investors through legislative and regulatory improvements. However, challenges such as inadequate regulatory mechanisms, corruption, and limited human capacity hinder progress, making the investment environment difficult for potential investors. Despite these obstacles, the government is focused on developing key sectors, particularly oil and gas, and is working to enhance its infrastructure and regulatory framework to better support foreign investment.