Financial Crime World

Yemen’s Anti-Money Laundering Efforts Face Major Deficiencies

A recent assessment has revealed significant shortcomings in Yemen’s anti-money laundering (AML) system, citing deficiencies in supervision and oversight, communication gaps, and inadequate cooperation with international partners.

Supervision and Oversight Shortcomings

The Ministry of Social Affairs was found to be lacking in human, financial, and technical resources, leading to a failure to effectively supervise the national non-profit sector, which is vulnerable to terrorist exploitation. Additionally, there was a significant gap in communication between the Ministry and the national non-profit societies and institutions sector regarding awareness raising and measures to protect against terrorist exploitation.

AML Committee Deficiencies

The AML mechanism in Yemen relies heavily on the AML Committee, composed of members from different authorities, including the Customs Authority, General Investment Authority, and the Ministry of Social Affairs. However, the committee lacks representatives from other relevant authorities and suffers from a lack of coordination among its members and the authorities they represent.

International Conventions

Yemen has ratified several international conventions related to AML and terrorist financing, including:

  • The 1998 Vienna Convention
  • The 2000 Palermo Convention
  • Signed but not yet ratified the 1999 UN Convention for the Suppression of the Financing of Terrorism

Despite these efforts, Yemen’s legal framework falls short in several areas. For instance:

  • There is no definition for “funds” including any type of properties
  • The law does not cover all designated categories of predicate offenses
  • Limited measures to confiscate properties used or intended for use in money laundering offenses
  • No express provisions on the criminal liability of legal persons

Preventive Measures Shortcomings

The assessment also highlighted deficiencies in preventive measures, including:

  • Secrecy laws that are inconsistent with international standards
  • Inadequate customer due diligence processes, with many financial institutions failing to verify:
    • The identity of customers
    • Their activities
    • Their size

Overall Assessment

Yemen’s AML system is rated as partially compliant with the Financial Action Task Force (FATF) Recommendations, citing significant deficiencies in:

  • Legal systems
  • Confiscation and provisional measures
  • Preventive measures

To address these shortcomings, Yemen must strengthen its supervision and oversight, improve communication with international partners, and enhance its legal framework to effectively combat money laundering and terrorist financing.