Financial Crime World

Yemen Struggles to Implement AML and CFT Regulations Amid Widespread Instability

As Yemen continues to grapple with political turmoil, economic instability, and widespread corruption, the country’s financial sector remains vulnerable to money laundering and terrorist financing. The Central Bank of Yemen (CBY), Financial Information Unit (FIU), and National Committee for Anti-Money Laundering/Combating the Financing of Terrorism (NC) are tasked with implementing anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations, but the effectiveness of these efforts remains uncertain.

Law no. 1/2010 On Anti-Money Laundering and Counter-Terrorism Financing provides the primary legal framework for AML/CFT activities in Yemen. The law defines:

  • Money Laundering: The transfer, concealment, or use of funds known or suspected to be derived from criminal activities.
  • Complicity in Money Laundering: Playing any role in money laundering acts.

The law also defines predicate crimes that can give rise to money laundering, including:

  • Organized crime involvement
  • Terrorism and its financing
  • Smuggling
  • Tax offenses
  • Fraud
  • Environmental crimes
  • Trading stolen goods

Terrorism Financing

Regarding terrorism financing, the law defines it as:

  • Intentional Raising, Providing, Collecting, or Moving Funds: Initiating, participating, inciting, ordering, colluding, conspiring, advising, or assisting in acts that use funds to support terrorist entities, individuals, or activities.

Challenges and Opportunities

Yemen’s financial sector remains vulnerable to exploitation by criminal networks and terrorist organizations, which can use the country’s chaotic political landscape to their advantage. To strengthen AML/CFT regulations and enforcement mechanisms, the CBY, FIU, and NC must work together to:

  • Prevent the misuse of Yemen’s financial system
  • Combat corruption
  • Maintain stability

However, the effectiveness of these efforts will depend on the government’s ability to maintain stability and combat corruption, which remains a significant challenge in Yemen.