Somalia’s Financial Reporting Center: Institutional Development and Anti-Money Laundering Efforts

Background

Establishment of the Anti-Money Laundering and Countering the Financing of Terrorism Act (AML/CFT)

• In 2016, Somalia passed the AML/CFT Act, establishing a robust framework to combat money laundering and terrorist financing.
• The law created the National Anti-Money Laundering and Financing Terrorism Committee (NAMLC) and the Financial Reporting Center (FRC) as Somalia’s Financial Intelligence Unit (FIU).

National AML/CFT Committee and Taskforce

Policy-making and Oversight

• NAMLC has policy-making and oversight responsibility for the AML/CFT regime in Somalia.
• The Committee consists of relevant stakeholders, including Ministers of Finance, Justice, Commerce, and Internal Security, as well as the Governor of the Central Bank of Somalia (CBS) and the Director of the National Intelligence and Security Agency (NISA).

Operationalizing Directives

• An AML/CFT Taskforce has been created to operationalize and enforce NAMLC directives.

Financial Reporting Center (FRC)

Mission and Vision

• The FRC is an independent national agency responsible for receiving, requesting, analyzing, and disseminating information concerning money laundering and terrorist financing.
• The FRC’s vision is to become a trusted and exemplary agency in support of a robust financial system hostile to financial crimes.

Key Role in Addressing ML/FT Challenges

• The FRC plays a key role in addressing money laundering (ML) and terrorist financing (TF) challenges and works closely with reporting entities, including financial institutions and designated non-financial business and professions (DNFBPs).

Responsibilities

Data Collection and Analysis

• Collecting and analyzing data associated with money transfers
• Documenting suspicious transactions
• Providing strategic intelligence, including statistics and typologies to increase risk awareness

Regulations and Guidelines

• Issuing regulations and guidelines for reporting entities

Goals

Building a Robust Financial System

• To build and maintain an environment in Somalia that is directed towards identifying and eradicating money laundering and terrorist financing.
• To fulfill Somalia’s international obligations (FATF’s 40 recommendations) to combat money laundering and terrorist financing.

Conclusion

The FRC plays a critical role in Somalia’s AML/CFT regime, working closely with relevant stakeholders to prevent and combat ML/FT.