Somalia Country Summary
Sanctions
High Concern
FATF AML Deficient List
Medium Concern
Terrorism
High Concern
Corruption
High Concern
US State ML Assessment
Medium Concern
Criminal Markets (GI Index)
Medium Concern
EU Tax Blacklist
Low Concern
Offshore Finance Center
Low Concern
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Anti Money Laundering
FATF Status
Somalia is not on the FATF List of Countries that have been identified as having strategic AML deficiencies
Compliance with FATF Recommendations
Somalia has not yet undertaken a Mutual Evaluation relating to the implementation of anti-money laundering and counter-terrorist financing standards.
Sanctions
Somalia, as a UN member, must adhere to sanctions aimed at maintaining international peace, which include various measures like arms embargoes and travel bans. The UN Security Council has established numerous sanctions regimes since 1966, with ongoing measures focusing on political settlements and counter-terrorism, while ensuring the rights of those targeted are considered.
The Arab League has also implemented sanctions, notably against Syria and Israel, with varying enforcement among member states. Recent calls for action include punitive measures against Israel regarding the Gaza situation, while the Arab League's ability to enforce sanctions is limited by member compliance.
Criminality
Rating |
0 (bad) - 100 (good) |
|---|---|
| Transparency International Corruption Index | 9 |
| World Bank: Control of Corruption Percentile Rank | 1 |
Somalia faces significant challenges with corruption, as the provisional constitution criminalizes various corrupt practices, but enforcement remains weak. The government has attempted to establish an anti-corruption commission, which was disbanded in 2022, and procurement laws are not effectively implemented, allowing for rampant corruption in government contracts. Additionally, criminal activities such as human trafficking, arms trafficking, and financial crimes are prevalent, exacerbated by weak governance and a dysfunctional justice system.
Economy
Somalia's economy is gradually rebuilding after decades of conflict, with the Federal Government of Somalia (FGS) actively encouraging foreign direct investment, particularly in agriculture, fisheries, and livestock. Despite achieving macroeconomic stability and completing the Heavily Indebted Poor Countries (HIPC) process in 2023, challenges such as a lack of regulatory frameworks, corruption, and security threats from al-Shabaab continue to hinder investment. The economy is projected to grow modestly, driven by urbanization, a vibrant private sector, and planned investments in various sectors.
The investment climate in Somalia is characterized by a welcoming stance towards foreign direct investment, particularly in sectors like agriculture, fisheries, and natural resources. However, potential investors face significant challenges, including a lack of a comprehensive legal framework, ongoing threats from the al-Shabaab terrorist group, and issues related to corruption and the enforcement of contracts. Despite these obstacles, recent government reforms and the completion of the Heavily Indebted Poor Countries process may create new opportunities for investment and economic growth.
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- Risk Analysis
- Corruption
- Economy
- Sanctions
- Narcotics
- Executive Summaries
- Investment Climates
- FATF Status
- Compliance
- Key Findings