Financial Crime World

Yemen: Casinos Prohibited, AML Efforts Lacking

In a surprise move, Yemen has banned casinos altogether, joining a select few countries that have taken drastic measures to combat money laundering (ML) and terrorist financing (TF). While this step may be seen as a significant effort to prevent illicit activities, experts warn that other areas of Yemen’s anti-money laundering (AML) framework remain woefully inadequate.

Commercial Companies Law

Yemen’s Commercial Companies Law sets out the procedures for establishing commercial companies, including the requirement for bearer shares. However, these shares are not traded in practice. The Ministry of Industry and Commerce is responsible for registering local businesses, as well as agencies, branches, and foreign companies.

Non-Profit Sector Challenges

Yemen’s non-profit sector faces significant challenges. The Ministry of Social Affairs and Labor has limited resources to oversee charitable societies and institutions, leaving a large gap in communication between the ministry and the national non-profit sector.

International Cooperation

In terms of international cooperation, Yemen relies on its AML Committee, which consists of members from different authorities. However, this committee lacks sufficient coordination with other authorities concerned with AML matters, such as customs and investment authorities.

Yemen has signed and ratified several international conventions aimed at combating ML and TF, including the 1998 Vienna Convention and the 2000 Palermo Convention. The country also has a legal framework for judicial cooperation in mutual legal assistance (MLA) and extradition.

Challenges to AML System

Despite these efforts, Yemen’s AML system faces significant challenges:

  • No clear definition of “funds” or properties
  • Lack of express provisions covering the criminal liability of legal persons
  • ML sanctions are not considered proportionate
  • Inability to measure the effectiveness of the AML legal system due to a lack of statistics

Preventive Measures

Yemen’s secrecy laws are inconsistent with international recommendations. The approval of judicial authorities is required to provide information to foreign parties, which can hinder international cooperation.

Customer Due Diligence (CDD) Processes

The country’s CDD processes are also inadequate:

  • Many financial institutions (FIs) do not verify the identity of beneficial owners or economic right holders
  • FIs fail to obtain information relating to the purpose and nature of business relationships

Conclusion

In conclusion, while Yemen’s decision to ban casinos is a significant step in combating ML and TF, other areas of its AML framework remain weak. The country must address these shortcomings to effectively prevent illicit activities and maintain international cooperation.