Financial Crime World

Yemen’s Financial Institutions Face Strict Compliance Requirements Amid Growing Concerns Over Money Laundering and Terrorism Financing

A Robust Regulatory Framework to Combat Money Laundering and Terrorism Financing

In a bid to combat the growing menace of money laundering and terrorism financing, Yemen has established a robust regulatory framework to ensure financial institutions comply with anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations.

The Central Bank of Yemen Leads the Effort

At the helm of this effort is the Central Bank of Yemen (CBY), which oversees the banking system’s compliance with AML and CFT regulations. The Financial Information Unit (FIU), established to receive, analyze, and disseminate suspicious transaction reports from financial institutions, operates in coordination with domestic and international entities to combat money laundering and terrorist financing.

National Committee for AML/CFT Ensures Comprehensive Approach

The National Committee for AML/CFT is responsible for formulating and updating Yemen’s national strategies against money laundering and terrorism financing, monitoring their implementation, and ensuring the country’s commitment to international standards. The committee works closely with regulatory bodies, including the CBY and FIU, to ensure a comprehensive approach to combating financial crimes.

Yemen’s AML/CFT framework is anchored in Law No. 1/2010 On Anti-Money Laundering and Counter-Terrorism Financing, which provides the primary legal framework for AML/CFT activities in the country. The law outlines definitions, obligations, penalties, and measures for combating money laundering and terrorism financing.

Key Definitions and Obligations

  • Money Laundering: The transfer of funds knowing or having reason to believe they are from criminal activities to hide their origins or assist someone involved in such crimes to evade consequences.
  • Complicity in Money Laundering: Punishable acts including initiating, participating, instigating, ordering, colluding, conspiring, advising, or assisting in money laundering activities.
  • Predicate Crimes for Money Laundering: Include organized crime involvement, terrorism and its financing, smuggling activities, tax offenses, fraud, and environmental crimes.
  • Terrorism Financing: Intentionally raising, providing, collecting, or moving funds towards a terrorist entity, individual, or act. Complicity in terrorism financing is also punishable.

Strict Compliance Obligations for Financial Institutions

Yemen’s financial institutions are under strict obligation to comply with these regulations, which aim to prevent the misuse of the financial system for illicit activities. The country’s regulatory bodies are working closely together to ensure that financial institutions are held accountable for any non-compliance with AML/CFT regulations.

Conclusion

As Yemen continues to grapple with the challenges posed by money laundering and terrorism financing, its financial institutions must remain vigilant in their efforts to comply with these regulations and prevent the misuse of the financial system.