The Maldives’ latest mutual evaluation presents a mixed assessment of the country’s anti-money laundering and counter-terrorist financing framework. While core elements of an AML/CFT system are in place, overall effectiveness is uneven and not yet consistently aligned with the Maldives’ risk profile. The evaluation reflects the framework and implementation as observed during the January 2025 on-site assessment and sets out priority actions to strengthen outcomes across policy coordination, supervision, investigations, sanctions implementation, and transparency.
The evaluation identifies a significant money-laundering risk, driven primarily by proceeds linked to drug trafficking and corruption. It also highlights exposure to transnational threats and the practical challenges of monitoring a dispersed maritime territory. These contextual factors increase vulnerability to cross-border criminal flows and complicate detection, disruption, and enforcement.
A major structural vulnerability is the existence of a significant illegal and unregulated secondary market for foreign exchange and informal remittance activity, including hawala-like operations. This informal ecosystem is assessed as creating opportunities for money laundering and terrorist financing, while the full scale of activity remains uncertain. The evaluation also situates these vulnerabilities within cash-based dynamics and foreign currency flows, including those linked to tourism and expatriate communities.
At the national policy level, the Maldives is assessed as having a good understanding of money laundering risks but a limited understanding of terrorist financing risks. The evaluation finds that the country lacks a national AML/CFT strategy and does not demonstrate a consistently coordinated approach to implementing risk-based priorities. Coordination mechanisms exist, but coordination is characterised as informal and sporadic in practice, with limited evidence of a structured national policy review cycle. The evaluation also notes a lack of a coordinated national policy and operational approach to preventing and combating proliferation financing.
Financial intelligence is a relative strength in parts of the system. The Financial Intelligence Unit is assessed as producing good-quality financial intelligence that supports predicate crime investigations, with more limited demonstrated impact in money laundering and terrorist financing investigations. However, the evaluation identifies operational and workflow constraints, including the reliance on manual processes for suspicious transaction reporting intake and analysis, which creates pressure on timeliness and scalability. It also points to gaps in feedback and outcome tracking that reduce the system’s ability to measure effectiveness and continuously improve intelligence use.
Law enforcement outcomes are a central weakness. The evaluation concludes that money laundering and terrorist financing investigations, prosecutions, and convictions are not wholly in line with the Maldives’ risk profile. It notes limited demonstrated capacity to develop complex money-laundering cases targeting professional laundering activity, networks, and higher-value proceeds. Capacity constraints are linked to limited prioritisation, reliance on informal self-training in key areas, and the absence of sufficiently standardised manuals and procedures to support consistent case development.
Asset recovery is assessed as particularly underdeveloped. The evaluation finds that confiscation is not pursued in line with risk and that the confiscation framework is incomplete and not implemented effectively. It identifies the absence of a comprehensive national asset recovery framework and a lack of asset management mechanisms to preserve seized asset value. The evaluation also notes limited use of international cooperation to pursue assets moved offshore and records that a money laundering-related confiscation order was later overturned.
Terrorist financing and targeted financial sanctions represent significant gaps relative to assessed vulnerabilities. The evaluation records no terrorist financing convictions and concludes that terrorist financing investigations are limited and not aligned with the risk profile. It highlights capacity and prioritisation weaknesses, limited training, and insufficient operational guidance for investigations. The evaluation also identifies deficiencies affecting the implementation of targeted financial sanctions for terrorist financing and proliferation financing, including issues that undermine clear, timely, and consistent obligations and dissemination across reporting entities.
The evaluation also highlights weaknesses in the oversight of non-profit organisations. It finds that the Maldives has not identified the subset of non-profit organisations at risk and has not established regular, comprehensive, and coordinated risk-based monitoring. Data and capacity constraints hinder risk-based outreach and supervision, and these weaknesses are treated as relevant in the broader context of terrorist financing vulnerability.
Preventive measures show an uneven pattern across sectors. Financial institutions, particularly banks, are assessed as demonstrating AML/CFT controls to a reasonable extent, but effectiveness is constrained by legal and regulatory gaps, including concerns connected to customer due diligence and politically exposed persons. By contrast, designated non-financial businesses and professions did not demonstrate adequate application of AML/CFT measures consistent with their risk exposure. Higher-risk DNFBP sectors, including real estate, are highlighted as areas where preventive controls and oversight require substantial strengthening.
Suspicious transaction reporting patterns reinforce this imbalance. Reporting is heavily concentrated in banks, while reporting from non-bank financial institutions is minimal and reporting from DNFBPs is absent. This is assessed as inconsistent with the Maldives’ risk environment and suggests gaps in awareness, controls, supervision, and enforcement across parts of the reporting population.
Supervision is assessed as not yet sufficiently risk-aligned. Although the banking sector dominates the financial system and receives the greatest supervisory attention, the evaluation identifies limited supervisory coverage where risks are elevated, including areas connected to money changing and remittance-related activity. It also highlights the presence of illegal and unlicensed money-changing businesses and hawala-like providers, and concludes that coordinated efforts to identify, deter, and sanction such activity are not yet effective. For DNFBPs, the evaluation stresses gaps in licensing and oversight frameworks in key areas, including real estate, which is linked to increased money laundering exposure.
Transparency of legal persons and beneficial ownership has been partially strengthened through reforms, but the evaluation finds that reliability is not yet assured in practice. It identifies weaknesses in the quality of beneficial ownership information submitted and notes that beneficial ownership information has not been systematically verified. The evaluation also indicates that the assessment of risks across different types of legal persons remains insufficient and that authorities have not consistently demonstrated the use of beneficial ownership information in investigations in line with risk.
International cooperation is presented as more developed than several domestic effectiveness areas. The evaluation describes a broad framework for mutual legal assistance and notes that cooperation is sought and provided moderately in line with risk, with informal channels often used in practice due to efficiency. At the same time, it identifies limitations in statistical tracking and points to areas where cooperation could be strengthened to better support priority risk responses, including asset recovery.
Overall, the evaluation’s central message is that the Maldives has established foundational AML/CFT structures but must shift from partial implementation to consistently risk-based outcomes. Priority reform needs include developing and implementing a national AML/CFT strategy; strengthening understanding and prioritisation of terrorist financing risk; improving the operational use and scalability of financial intelligence; building credible asset tracing, confiscation, and asset management capacity; ensuring effective targeted financial sanctions for both terrorist and proliferation financing; establishing risk-based supervision of higher-risk DNFBPs and non-profit organisations; taking coordinated action to address illegal money changing and hawala-like activity; and ensuring beneficial ownership information is accurate, verified, and usable in practice.
Source: Maldives' measures to combat money laundering and terrorist financing
