Financial Crime World

Somalia Tackles International Financial Institutions and Governments to Disrupt Money Laundering and Terrorism Financing

=====================================================

MOGADISHU, Somalia - In an effort to curb money laundering and terrorism financing in Somalia, international financial institutions and governments are working together with the country’s financial sector to develop a robust system for detecting and disrupting these illicit activities.

Progress Made in Implementing Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) Regulations

According to a report by the Financial Reporting Center (FRC), Somalia has made significant progress in implementing AML/CFT regulations. The FRC is an independent national agency responsible for receiving, requesting, analyzing, and disseminating information concerning money laundering and terrorist financing.

National AML/CFT Committee and Taskforce

To further strengthen its efforts, Somalia has established a National AML/CFT Committee and Taskforce, which brings together all relevant stakeholders in the implementation of the country’s AML/CFT national strategy. The committee is chaired by the Minister of Finance, with membership comprising Ministers from various sectors, including:

  • Justice
  • Commerce and Industry
  • Internal Security
  • Central Bank Governor
  • Attorney General
  • National Intelligence and Security Agency Director
  • FRC Director

The Taskforce, chaired by the FRC Director, includes representatives from various institutions, such as:

  • Central Bank
  • NISA (National Intelligence and Security Agency)
  • Ministry of Finance
  • Ministry of Customs
  • Ministry of Commerce and Industries
  • Ministry of Justice

Duties of the National AML/CFT Committee and Taskforce

The committee’s duties include:

  • Identifying, analyzing, and mitigating ML/FT risks and threats
  • Proposing institutional arrangements for training and capacity-building to prevent and combat ML/FT in the Federal Member States

Strengthening Cooperation with International Financial Institutions and Governments

Somalia has also strengthened its cooperation with international financial institutions and governments through information sharing agreements. The country’s financial intelligence unit (FIU) shares information with foreign FIUs on an FIU-to-FIU basis without a specific agreement, as required by the AML/CFT law.

Collaboration with Reporting Entities

The FRC is working closely with reporting entities, including:

  • Financial institutions
  • Designated non-financial businesses

to ensure compliance with AML/CFT regulations. The agency provides guidelines and regulations for reporting entities and conducts regular training and capacity-building programs to enhance their knowledge and skills in detecting and reporting suspicious transactions.

Measures to Prevent Misuse of the Financial System

In addition, Somalia has implemented various measures to prevent the misuse of its financial system, including:

  • Enhanced due diligence requirements for all business relationships
  • Customer identification
  • Ongoing monitoring of customers’ transactions

Recognition by International Organizations

The country’s efforts have been recognized by international organizations, such as the Financial Action Task Force (FATF), which has commended Somalia for its progress in implementing AML/CFT regulations. The FATF is an intergovernmental organization that aims to combat money laundering and terrorist financing globally.

Expected Outcomes

Somalia’s success in combating money laundering and terrorism financing is expected to:

  • Enhance its reputation as a stable and secure country
  • Attract foreign investment
  • Improve its economic stability