Here’s the converted article in Markdown format:
Somalia’s Banking Sector Embraces Compliance Software to Meet International Standards
In an effort to meet international standards necessary for correspondent banking relationships, Somalia’s financial and banking sector is rapidly developing and building systems. Despite having a relatively small economy, the country’s total sector assets are equivalent to about 4.3 percent of its Gross Domestic Product (GDP). Credit to the private sector accounts for around 1.3 percent of GDP.
The Banking Sector in Somalia
The banking sector in Somalia is dominated by informal conglomerate groups, each comprising a bank, money transfer business, mobile payments services provider, and mobile network operator. Thirteen licensed banks are operational in the country, with the largest being:
- International Bank of Somalia (IBS)
- Premier Bank
- Salaam Somali Bank
- Dahabshiil International Bank
- Amal Bank
Mobile Money and Remittances
Mobile money is widespread in Somalia, with an estimated 73 percent penetration. According to a World Bank report, diaspora remittances are estimated at $2 billion annually. Hawala businesses, which are popularly known as “money transfer companies,” are licensed to transfer and receive money through informal networks and channels. Three mobile payments services providers are linked to the biggest of seven mobile network operators.
National Payment Systems
The Central Bank of Somalia has launched a new payment system, known as National Payment Systems, which includes electronic payments, clearing, and settlement systems. This move enables the central bank to conduct open market operations and transmit monetary policy. Most domestic payments in Somalia are now made using mobile payments and bank transfers denominated in US dollars.
Compliance with International Standards
To strengthen its anti-money laundering (AML) and countering the financing of terrorism (CFT) regimes, many Somali banks are seeking to come into full compliance with international standards. The Central Bank of Somalia has AML/CFT oversight of the new payment system, which aims to reassure foreign regulators and banks about the appropriateness of payments sent to Somalia.
Preparation for Mutual Evaluation
The first mutual evaluation of Somalia’s AML/CFT compliance is set to take place in 2024. In preparation for this, most Somali banks are expanding their services and seeking new capital and investment through equity investments, development of core banking tools, improved financial management systems, credit and loan services, and other financial products.
Resources
The Somalia Bankers Association (SBA) is a key resource for information on the country’s banking sector. The SBA can be reached at info@sba.so or +252-61-169-3020. The Central Bank of Somalia is also a valuable source of information, and can be contacted at info@somalbanca.org or +252-1216416.
Note: I’ve added headings, subheadings, bullet points, and proper formatting to make the article easier to read. Let me know if you have any further requests!