Financial Crime World

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Somalia: A Country Marred by Instability and Corruption

Security Crisis


  • Lack of Effective Governance: Somalia lacks effective governance, with various regions operating as de facto independent states or under the control of armed groups like Al-Shabaab.
  • Porosity of Borders: The country’s borders are porous, facilitating smuggling and terrorist activities.
  • Al-Shabaab Control: Al-Shabaab continues to occupy and control large rural areas in south-central Somalia.

Economic and Financial Environment


  • Limited Government Control: The government has limited control over the economy, with a robust informal money system (hawala) serving the Somali diaspora.
  • Money Laundering: Money laundering through trade mispricing is common, facilitating the movement of money into and out of the country.
  • Regulatory Void: Online gambling and crowdfunding are not regulated, providing funding sources for terrorist groups like Al-Shabaab.

Civil Society and Social Protection


  • Lack of Basic Services: The central state has no capacity to provide basic services, relying on international aid.
  • Politicized Aid Distribution: Aid distribution is politicized, with Al-Shabaab taxing such funds to reinforce its local power.
  • Inadequate Victim Support: There are no credible mechanisms in place to protect victims of crime or provide specialized services.

Journalism and Freedom of Expression


  • Dangers for Journalists: Somalia is one of the most dangerous countries for journalists, with political violence and corruption undermining freedom of the press.
  • Censorship and Repression: Non-state actors and regional governments control much of the country, making it difficult for journalists to report news without censorship.
  • Targeted Attacks: Journalists who refuse to comply become targets for Al-Shabaab militants or face arbitrary detention, torture, targeted killings, or closure of their media houses.

The State of Somalia


  • Economic Decline: Somalia is considered one of the worst-performing countries in the world by economic and business indicators.
  • Entrepreneurial Spirit: Somalis are incredibly entrepreneurial, with micro-entrepreneurship and local business councils adapting to decades of uncertain governance.
  • Federal Government Powerlessness: The federal government has no power outside Mogadishu in terms of taxation, while Al-Shabaab continues to derive funding from sources like checkpoint taxation and business extortion.