FATF Status

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

Latest FATF Statement - 25 October 2024

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: (1) adequately criminalising money laundering and terrorist financing; (2) establishing procedures to identify and freeze terrorist assets; (3) improving its customer due diligence and suspicious transaction reporting requirements; (4) issuing guidance; (5) developing the monitoring and supervisory capacity of the financial sector supervisory authorities and the financial intelligence unit; and (6) establishing a fully operational and effectively functioning financial intelligence unit. While the FATF determined that Yemen has completed its agreed action plan, due to the security situation, the FATF has been unable to conduct an on-site visit to confirm whether the process of implementing the required reforms and actions has begun and is being sustained. The FATF will continue to monitor the situation, and conduct an on-site visit at the earliest possible date.

Compliance with FATF Recommendations

It should be noted that the new style FATF Mutual Evaluation has not yet been undertaken.

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.

Corruption is a significant issue in Yemen, worsened by ongoing political instability since 2011, which complicates the investment landscape for companies. The prevalence of patronage networks and nepotism makes it challenging for businesses to operate without local partnerships. Although the government has enacted anti-corruption laws, they fail to address all corruption forms, notably excluding passive bribery and extortion, which remain common practices.

Yemen's economy is classified as low-income and heavily reliant on oil and gas, which significantly contribute to its GDP and government revenue. The country struggles with extreme poverty, food insecurity, and high unemployment, worsened by ongoing civil conflict and a blockade that has devastated its economic infrastructure.

Yemen's investment climate is severely constrained by ongoing conflict, political instability, and inadequate infrastructure, making it one of the most challenging environments for investors. The civil war has led to a significant economic decline and a humanitarian crisis, which deters foreign investment and limits economic growth opportunities. Additionally, the weak legal and regulatory framework, along with high security risks, further complicates the prospects for potential investors.