Financial Crime World

Somalia Faces Challenges in AML/KYC Compliance Despite Improvements, Says FATF Follow-up Report

Despite making some progress in implementing anti-money laundering (AML) and know-your-customer (KYC) measures, Somalia has been identified as a country with significant challenges in the fight against money laundering and terrorist financing.

Progress Made but Challenges Remain

According to the latest follow-up report by the Financial Action Task Force (FATF), Somalia has largely complied with several of the 40 recommendations made by the international organization. However, it remains non-compliant in several areas, including its handling of non-profit organizations and new technologies.

Challenges Identified

  • Handling of non-profit organizations
  • New technologies
  • Effective national cooperation and coordination mechanisms
  • Financial institution secrecy laws
  • Transparency in beneficial ownership of legal persons and arrangements
  • Regulation and supervision of financial institutions and DNFBPs (designated non-financial businesses and professions)

FATF Recommendations

The FATF has called on Somalia to address these remaining challenges and improve its overall AML/CFT regime. The report noted that the country’s failure to comply with several recommendations poses a risk to the global financial system and could undermine efforts to combat money laundering and terrorist financing.

Rating System

The FATF uses a rating system, with countries rated as:

  • Compliant (C)
  • Largely compliant (LC)
  • Partially compliant (PC)
  • Non-compliant (NC)

Somali Government Response

In a statement, the Somali government acknowledged the report’s findings and pledged to continue implementing reforms aimed at strengthening its AML/CFT regime. The government also expressed its commitment to cooperating with international partners to combat money laundering and terrorist financing.

Next Steps

The FATF’s latest follow-up report on Somalia is seen as an important step in ensuring that the country takes the necessary measures to prevent and combat money laundering and terrorist financing. It is hoped that the report will help to prompt further progress in addressing these challenges and improving Somalia’s overall AML/CFT regime.

Conclusion

Despite making some progress, Somalia still faces significant challenges in implementing effective AML/KYC measures. The FATF has called on the country to address these remaining challenges and improve its overall AML/CFT regime to prevent money laundering and terrorist financing.