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Yemen’s Financial Institutions Boost Compliance Efforts with US Agency Support

Aden’s Financial Intelligence Unit (FIU) has published its second annual report, highlighting significant progress in combating terrorist financing and money laundering. The report, supported by the US Agency for International Development’s Economic Recovery and Livelihoods Program (ERLP), marks a major milestone in Yemen’s efforts to strengthen financial institution compliance.

Establishing a Central Hub

Established in 2019, the FIU serves as a central hub for receiving, analyzing, and disseminating financial intelligence related to suspicious transactions and activities. Since 2020, USAID ERLP experts have been working closely with the FIU head, Mr. Basem Dabwan, and his team to establish the foundation for the Unit’s effective functioning and align its oversight activities with international anti-money laundering/counter financing terrorism (AML/CFT) initiatives.

Enhancing Financial Intelligence Capabilities

USAID ERLP’s collaborative efforts have enhanced the FIU’s financial intelligence capabilities by identifying patterns, trends, and anomalies within financial data that may indicate connections to criminal and terrorist activities. The support reflects the Unit’s commitment to the Financial Action Task Force (FATF), a leading intergovernmental initiative that sets AML/CFT standards.

Strengthening Laws and Regulations

The USAID ERLP analysis of Yemen’s AML/CFT law identified areas in need of revision to meet FATF standards, which led to key amendments addressing shortcomings. In 2021, USAID ERLP experts assisted the Central Bank of Yemen (CBY) in updating circulars to effectively address these shortcomings.

Implementing Risk-Based Approach

The CBY distributed the circulars to banks and financial institutions, requiring them to classify clients according to risks posed and submit detailed annual reports evaluating any such risks they had been exposed to. The support has also led to the establishment of a five-person AML/CFT unit within the Central Bank of Yemen to oversee inspections of banks and exchange houses.

Expanding National and International Network

USAID ERLP has also supported on-site inspections of banks participating in foreign exchange auctions, adoption of AML/CFT procedures related to FX auctions, and publication of the FIU’s first annual report. The collaboration has expanded the Unit’s national and international network through Memoranda of Understanding (MOUs) with authorities from six countries.

Capacity Development

Targeted capacity development for the Unit’s staff has also been a key component, including training-of-trainers programs and workshops to enhance knowledge of key risks associated with non-compliance. Aden’s FIU head, Mr. Basem Dabwan, emphasized the commitment to presenting itself in the best possible light, adhering to highest standards, and enhancing its positive image through continued partnership and cooperation with USAID/ERLP.

Conclusion

The collaboration between Yemen’s Financial Intelligence Unit and USAID ERLP has achieved significant progress in strengthening financial institution compliance and combating terrorist financing and money laundering. The support has enhanced the FIU’s capabilities, expanded its network, and contributed to the improvement of Yemen’s AML/CFT regulatory framework.