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 a low-income Middle Eastern economy, heavily dependent on oil and gas, which are crucial for its GDP and government revenues. The country struggles with significant challenges such as widespread poverty, food insecurity, and high unemployment, all worsened by ongoing civil conflict and economic instability.

Yemen's investment climate is severely impacted by ongoing civil war, political instability, and inadequate infrastructure, making it one of the least attractive destinations for foreign investment. The humanitarian crisis and high corruption levels further discourage potential investors, although there are efforts to attract investments in renewable energy and agriculture. Overall, significant reforms are needed to improve the investment climate and restore investor confidence.