YEMEN
Summary

Sanctions

The UN and EU have imposed arms embargo, travel ban and asset freeze restrictions and there are limited US sanctions are in force

FAFT AML Deficient

Yes 

Higher Risk Areas

 

Compliance with FATF 40 + 9 Recommendations

Supporter of / Safe Haven for International Terrorism

Not on EU White list equivalent jurisdictions

Corruption Index (Transparency International & W.G.I.)

World Governance Indicators (Average score)

Failed States Index (Political)(Average score)

Medium Risk Areas

US Dept of State Money Laundering assessment

Weakness in Government Legislation to combat Money Laundering

 

 

ANTI-MONEY LAUNDERING

 

FATF Status

Yemen is currently on the FATF List of Countries that have been identified as having strategic AML deficiencies

 

Latest FATF Statement - 23 June 2017

Since February 2010, when Yemen made a high-level political commitment to work with the FATF and MENAFATF to address its strategic AML/CFT deficiencies, Yemen has made progress to improve its AML/CFT regime. In June 2014, the FATF determined that Yemen had substantially addressed its action plan at a technical level, including by adequately criminalising money laundering and terrorist financing; establishing procedures to identify and freeze terrorist assets; improving its customer due diligence and suspicious transaction reporting requirements; issuing guidance; developing the monitoring and supervisory capacity of the financial sector supervisory authorities and the financial intelligence unit; and establishing a fully operational and effectively functioning FIU. While the FATF determined that Yemen has completed its action plan agreed upon with the FATF, due to the security situation, the FATF has been unable to conduct an on-site visit to assess whether the process of implementing the required reforms and actions is underway. The FATF will continue to monitor the situation, and conduct an on-site visit at the earliest possible date.

 

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Yemen was undertaken by the Financial Action Task Force (FATF) in 2008. According to that Evaluation, Yemen was deemed Compliant for 0 and Largely Compliant for 4 of the FATF 40 + 9 Recommendations. It was Partially Compliant or Non-Compliant for 5 of the 6 Core Recommendations.

 

US Department of State Money Laundering assessment (INCSR)

Yemen was deemed a Jurisdiction of Concern by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR).

Key Findings from the report are as follows: -

 

Yemen is not considered a regional financial center. The financial system in Yemen is underdeveloped, and the extent of money laundering is not well known. The government’s collapse and Houthi ascendancy to control much of the country in early 2015 render Yemen vulnerable to money laundering and other financial abuses, including terrorism financing.

The profitability of the smuggling of goods and contraband has led to a large informal economy in Yemen. Criminal proceeds in Yemen tend to emanate from foreign criminal activity, including smuggling by criminal networks and terrorist groups operating locally. There have been a number of U.S. investigations of qat (a mild narcotic) smuggling from Yemen and East Africa into the United States, with profits laundered and repatriated via hawala networks. The ongoing conflict in Yemen has greatly reduced U.S. government investigative efforts and cooperation with Yemeni authorities.

Yemen has a free trade zone (FTZ) in the port city of Aden, although the conflict significantly disrupted trade and trade controls in 2015. Identification requirements are enforced within the FTZ. Truckers must file the necessary paperwork in relevant trucking company offices and must wear identification badges. FTZ employees must undergo background checks by police, the Customs Authority, and employers. There is no evidence the FTZ is being used for trade-based money laundering or terrorism financing schemes.

 

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SANCTIONS

In February 2014, pursuant to resolution 2140 (2014), the UN imposed an arms embargo, travel ban and targeted asset freeze restrictions against Yemen

Read Regulation

 

On 18 December 2014, in view of the situation in Yemen, the EU imposed Council Regulation (EU) No 1352/2014 concerning restrictive measures against natural or legal persons, entities and bodies identified by the Sanctions Committee as engaging in or providing support for acts that threaten the peace, security or stability of Yemen

Read Regulation

 

The US has imposed sanctions against Yemen however it should be noted that the Executive Order does not impose broad-based sanctions against the country of Yemen or its government or people.

 

The Arab League (comprising 22 Arab member states), of which this country is a member, has approved imposing sanctions on Syria. These include: -

-      Cutting off transactions with the Syrian central bank

-      Halting funding by Arab governments for projects in Syria

-      A ban on senior Syrian officials travelling to other Arab countries

-      A freeze on assets related to President Bashar al-Assad's government

The declaration also calls on Arab central banks to monitor transfers to Syria, with the exception of remittances from Syrians abroad.

 

The Arab League has also boycotted Israel in a systematic effort to isolate Israel economically in support of the Palestinians, however, the implementation of the boycott has varied over time among member states. There are three tiers to the boycott. The primary boycott prohibits the importation of Israeli-origin goods and services into boycotting countries. The secondary boycott prohibits individuals, as well as private and public sector firms and organizations, in member countries from engaging in business with any entity that does business in Israel. The Arab League maintains a blacklist of such firms. The tertiary boycott prohibits any entity in a member country from doing business with a company or individual that has business dealings with U.S. or other firms on the Arab League blacklist.

 

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BRIBERY & CORRUPTION

 

Index

Rating (100-Good / 0-Bad)

Transparency International Corruption Index

14

World Governance Indicator – Control of Corruption

3

 

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INVESTMENT CLIMATE - Executive Summary (US State Department)

Yemen’s investment climate has improved steadily in the past three years, with the economy expected to grow by 5.0 percent in 2014. In April 2014, Yemen’s Parliament agreed to join the World Trade Organization (WTO), with the hope that Yemen’s eventual accession will lead to a freer and more open market for international and domestic investors. International donors pledged $7.8 billion in assistance to Yemen in 2012, with segments of that funding intended for large infrastructure projects. Both government officials and the private sector admire the professionalism and high-quality products of U.S. companies and seek to attract American companies to enter the Yemeni market.

However, the overall business-enabling climate presents a number of challenges. Corruption and bribery are common, and some Yemeni officials view foreign investment as an opportunity to seek out personal profit. Navigating the inner workings of competing centers of authority within the government may require a competent local partner. U.S. investors must pay special attention to ensure that they and their local partners remain compliant with the U.S. Foreign Corrupt Practices Act.

Security is a serious threat, as terrorist organizations have a history of targeting Westerners in Yemen. Al-Qaeda in the Arabian Peninsula (AQAP) continues to target infrastructure and government facilities, and terrorists have demonstrated the ability and desire to carry out large-scale attacks. Kidnapping of Westerners is a critical and growing threat, with several victims still being held for ransom by al-Qaeda or local tribes. The January 29, 2014 U.S. Department of State travel warning for Yemen urges U.S. citizens to defer travel to Yemen, and those U.S. citizens currently living in Yemen, to depart.

Other challenges include weak intellectual property rights enforcement, opaque dispute settlement mechanisms, as well as unclear and inconsistent lines of decision-making authority within the government. Official letters and memoranda to investors, as well as instructions within Yemeni ministries, are routinely ignored by government officials

 

 

 

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