Yemen: Casino Prohibition and Anti-Money Laundering Challenges
In an effort to strengthen its anti-money laundering (AML) regulations, Yemen has banned casinos entirely, a step towards combating financial crimes in the country.
Legal Framework and National Cooperation
According to recent reports, commercial companies are established under the Commercial Companies Law, which outlines procedures and controls. However, there is no trust fund or other legal arrangement in Yemen. Charitable societies and institutions are overseen by the Ministry of Social Affairs and Labor, but have faced significant challenges due to resource shortages.
Yemen has signed and ratified several conventions related to AML, including the 1998 Vienna Convention and the 2000 Palermo Convention. The country also has a legal framework that allows for judicial cooperation in mutual legal assistance (MLA) and extradition.
Challenges Facing Yemen’s AML Mechanism
Despite these efforts, Yemen’s AML mechanism faces significant challenges:
- The absence of representatives from certain authorities concerned with AML matters, such as the Customs Authority, General Investment Authority, and Ministry of Social Affairs, hinders coordination among committee members.
- The country’s legal system lacks a definition for “funds” and predicate offenses, making it difficult to measure the effectiveness of its AML legal framework.
- Confiscation and provisional measures are limited, and secrecy laws do not align with international standards.
Preventive Measures
In terms of preventive measures, customer due diligence is limited in most financial institutions (FIs), particularly non-banking ones. This includes:
- Failing to account for transaction details and beneficial owners
- No obligation to verify the identity of authorized representatives or inspect business relationships
As a result, Yemen has been rated as Non-Compliant with several FATF Recommendations, highlighting the need for further reforms to strengthen its AML regulations and prevent financial crimes.
Ratings Summary
| Category | Rating |
|---|---|
| Legal Systems | Partly Compliant |
| ML Offense | Partly Compliant |
| Confiscation and Provisional Measures | Partly Compliant |
| Preventive Measures | Non-Compliant |
Key Challenges
- Lack of definition for “funds” and predicate offenses
- Limited confiscation and provisional measures
- Inadequate customer due diligence practices
- Insufficient secrecy laws alignment with international standards
Yemen’s efforts to strengthen its AML regulations are ongoing, but significant challenges remain. The country must address these issues to ensure a robust AML framework that prevents financial crimes and maintains the integrity of its financial system.