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Somali money transfer companies 'facilitated transactions between suspected arms dealers', report finds

The report threatens the limited access Somali money transfer companies have to international banks [Getty]

Date of publication: 18 September, 2020

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The damning report identifies 176 transactions within a six-year timeframe that were allegedly linked to suspected weapons dealers in Somalia and Yemen.

Somali money transfer companies have facilitated the movement of over $3.7 million between suspects arms dealers in recent years, according to a report seen by Reuters.

The findings by the Global Initiative Against Transnational Organised Crime (GIATOC), a Swiss-based NGO, threaten to jeopardise Somali transfer companies’ already limited access to international banks.

While millions in the impoverished nation depend on transfer companies to maintain their livelihoods, banks mostly refuse to deal with them, fearing a lack of transparency and weak compliance with anti-money laundering regulations.

The Central Bank of Somalia, which is charged with regulating money transfer firms, claims it is unaware of the transfers and says it has made progress in countering terrorist financing.

Four companies contacted by Reuters said they abided by international customer identification standards, using specialist third-party databases which track internationally-sanction individuals.

Some acknowledged it had been difficult given Somalia has no national ID cards.

The report by GIATOC reviewed almost six years of transactions records in northeastern city of Bosaso, comparing them with mobile phone records from the authorities and databases.

It identified no less that 176 transactions within than time frame that is said were linked to suspected weapons dealers in Somalia and Yemen.

Nearly two-thirds of all transfers stood over $10,000, the threshold that demands an automatic report to regulatory authorities.

Two transfers totalling nearly $40,000 were to numbers associated with Yemen national Sayf Abdulrab Salem al-Hayashi, who was sanctioned by the US in 2017 for allegedly supplying money and arms to al-Qaeda in the Arabian Peninsula and Islamic State in Yemen.

The transactions were carried out by Somali-based Amal Express and Iftin Express, which used different combinations of his name and nickname.

Reached for comment, Amal Express claimed the transfer slip linked to Hayashi in the report was forgery. Iftin Express echoed the charge, adding that it had reported all transactions above $10,000 to Somali authorities.

While the other two companies had not facilitated transfers to sanctioned individuals, the report found that individuals were able to complete transactions using multiple names and numbers, in contravention of Somali law.

One man allegedly used 24 names between the four companies. All of them denied allowing customers to use multiple names and numbers.

Aside from al-Hayashi, three others of the six men have been identified as suspected arms dealers in public records by the UN panel of experts on Somalia. Two were named in a confidential annex to a 2018 report by the same group.

With few Somalis owning bank accounts, money transfer companies are critical in enabling economic functioning and the delivery of humanitarian aid.

Read also: Somalia facing 'triple threat' of coronavirus, floods, and locusts, UN warns

According to Jay Bahadur, former the head of the UN panel of experts, cutting companies from international banking services would harm "families that rely on them and drive financial flows underground."

He called on companies to ensure their agents adhere to anti-money laundering laws and said Somali authorities had a duty to improve enforcement.

"Financial regulatory bodies in Somalia are understaffed, under-resourced, and aren't trusted by domestic financial institutions,” he said.

"They receive limited reporting data and aren't able to take much action with what they do receive" he added.

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