Yemen Takes Steps to Prevent Financial Crime, But More Work Needed to Meet International Standards

A recent report by the Financial Action Task Force (FATF) has highlighted Yemen’s efforts to prevent financial crime, but also identified several areas where the country needs to improve its compliance with international standards.

Progress Made

According to the report, Yemen has made progress in implementing certain technical requirements of the FATF Recommendations, including:

• Assessing risk and applying a risk-based approach
• National cooperation and coordination
• Targeted financial sanctions related to terrorism and terrorist financing
• Confiscating proceeds from crime and freezing assets
• Regulating and supervising financial institutions

Areas for Improvement

However, Yemen was found to be non-compliant with several other requirements, including:

• The requirement to have a comprehensive law on money laundering and terrorist financing
• Ensuring that non-profit organizations are subject to effective supervision
• Meeting standards for reporting suspicious transactions
• Having insufficient powers of supervisors

Concerns and Risks

Yemen’s lack of progress in these areas has raised concerns about the effectiveness of its financial crime prevention measures. The FATF report noted that Yemen’s financial system is vulnerable to abuse by criminal organizations and terrorist groups, and that the country needs to take further action to prevent money laundering and terrorist financing.

Government Commitment

The Yemeni government has acknowledged the need for improvement and has committed to implementing additional measures to strengthen its financial crime prevention regime. However, it remains to be seen whether these efforts will be sufficient to meet international standards.

Guidance for Financial Institutions

In the meantime, financial institutions operating in Yemen are advised to exercise enhanced due diligence when conducting business with customers from high-risk countries or sectors. They should also be aware of the risks associated with dealing with individuals and entities that have been designated as terrorists or terrorist financiers.

Conclusion

The FATF report is a reminder of the importance of effective financial crime prevention measures, not only for Yemen but for all countries. The international community has a vested interest in ensuring that financial institutions are subject to robust regulations and supervision, and that criminal organizations and terrorist groups are unable to exploit vulnerabilities in the system.

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