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 faces severe corruption challenges, with the provisional constitution criminalizing various corrupt practices, yet enforcement remains ineffective. The Federal Government of Somalia (FGS) has attempted to establish an independent anti-corruption commission, but it was disbanded in 2022 due to legal procedural issues, and efforts to reconstitute it are ongoing. Despite laws requiring open tender processes for government contracts, the FGS often bypasses these regulations, leading to rampant corruption and a lack of accountability in procurement, compounded by the absence of a whistleblower protection framework.

Somalia's economy is gradually rebuilding after decades of conflict, with the Federal Government of Somalia (FGS) actively promoting 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 and economic growth.

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, a weak judicial system, endemic corruption, and threats from the al-Shabaab terrorist group. Despite these obstacles, recent government reforms and the establishment of the Somalia Investment Promotion Office aim to improve the investment environment and attract foreign capital.