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.

Somalia's provisional constitution criminalizes various forms of corruption, yet enforcement remains weak, with rampant corruption particularly in government procurement. An independent anti-corruption commission was established but disbanded in 2022, and efforts to reconstitute it are ongoing. The lack of a central agency for whistleblowing, combined with ineffective procurement laws and a dysfunctional regulatory framework, perpetuates an environment of lawlessness and impunity, severely hindering economic competitiveness.

Somalia's economy is gradually rebuilding after decades of conflict, with real GDP growth projected at 3.1% in 2023, driven by opportunities in agriculture, fisheries, and livestock. Despite challenges such as a lack of a comprehensive legal framework, endemic corruption, and threats from the al-Shabaab terrorist group, the government is focused on economic reforms and increasing domestic revenue, particularly in the telecom sector. The completion of the Heavily Indebted Poor Countries (HIPC) process in 2023 has also reduced Somalia's external debt significantly, potentially opening new avenues for investment.

Somalia's investment climate is characterized by a welcoming stance towards foreign direct investment, particularly in sectors like agriculture, fisheries, and natural resources. However, challenges such as a lack of a comprehensive legal framework, civil judicial inefficiencies, and threats from the al-Shabaab terrorist group hinder potential investments. Despite these obstacles, recent government reforms and the establishment of the Somalia Investment Promotion Office (SOMINVEST) aim to improve the business environment and attract foreign investors.