Financial Crime World

Government Urged to Prioritize Interventions with Timely Action Plans

A recent report by the National Risk Assessment (NRA) has raised concerns over the effectiveness of Somalia’s financial services industry in combating money laundering and terrorist financing risks. While the report highlights several challenges, experts argue that it lacks a balanced approach and fails to provide clear recommendations for improvement.

Criticism of the Report

The NRA recommends 182 interventions, but critics say that the government needs to prioritize these actions with specific timelines and measurable outcomes. “It’s not just about listing recommendations; we need to see concrete plans for implementation,” said an expert in financial regulations.

  • The report accuses the government, financial services industry, and commercial entities of lack of participation and wilful disregard of compliance obligations.
  • Experts argue that this accusatory tone is detrimental to Somalia’s reputation and may hinder cooperation with international partners.

Concerns Over Credibility

The NRA also fails to provide positive evidence of the country’s progress in combating ML/TF risks. The report barely mentions:

  • Controls in place
  • Regulatory supervisory reviews by the Central Bank of Somalia (CBS) and Financial Reporting Centre (FRC)
  • Effectiveness of regulations and compliance status

Experts point out that a significant proportion of the report is copy-paste from outside sources, using outdated information and analysis based on perception. This raises concerns about the credibility of the assessment and its potential impact on international perceptions.

Recommendations for Improvement

To mitigate these risks, experts recommend:

  • The government establish a clear governance framework around policy-making and publication of sensitive documents
  • Financial institutions review the report to ensure accuracy and transparency

Consequences of Inaccurate Reporting

International banks, regulators, and investors will soon have access to Somalia’s NRA, which could significantly impact investor perception and foreign direct investment flows. The FATF will publish the report in due course, making it crucial that the conclusions are factually accurate, balanced, risk-based, and clearly articulated.

Conclusion

In conclusion, while the NRA highlights several challenges facing Somalia’s financial services industry, its lack of balance and failure to provide clear recommendations hinder effective policy-making and implementation. The government must prioritize interventions with timely action plans to address these risks and promote a more stable and transparent financial environment in Somalia.