A critical analysis of Somalia’s current antimoney laundering and counter financing of terrorism regime: a comparative study with Malaysia
Abstract
Purpose
Concerns on money laundering (ML) and terrorist financing increased, as ML accounted 2%–5% of the global GDP, with Switzerland, the USA, Canada, India and Russia having high laundering rates. Banks were fined over US$320bn in 2008, but money laundering still accounted for 3.6% of global GDP in 2009, thereby indicating the need for effective regimes. Therefore, this study aims to critically analyze the antimoney laundering (AML)/CFT regime of Somalia, identify loopholes in the regime, raise awareness and propose recommendations for regime improvement.
Design/methodology/approach
The qualitative research approach is used to compare Somalia’s AML/CFT regime with the corresponding regime of Malaysia through the black letter method combined with document analysis. Malaysia is selected as a benchmark for two reasons: firstly, it is an Islamic country like Somalia, and secondly, Malaysia has complied with integrity-related standards.
Findings
This study revealed that an impactful AML/CTF regime is reached by closing loopholes in the law, reevaluating and improving regulatory agencies and measures, facilitating formal financial services and collaborating with regional and international standard setters. According to the results, Somalia AML/CFT regime is counterproductive in criminalizing offenses; regulating digital currencies and mobile money, disclosures and nonfinancial business and provisions; and governing training requirements for regulatory agencies and financial institutions.
Originality/value
To the best of the author’s knowledge, this paper is the first of its kind in the study of Somalia’s regime building. Also, this study incorporates rich scholarly discourse on effective regime building.
Keywords
Acknowledgements
The author thanks to Professor SHIMADA Yuzuru, Professor OKADA Isamu and Associate professor FUJIKAWA Kentaro for their comments in the earlier draft of this paper. The author also expresses gratitude to the three anonymous reviewers of this journal for their valuable and constructive feedback on the previous draft of this article.
Funding: The Japanese government’s MEXT Scholar funding financially assisted this study.
Citation
Hersi, A.H. (2023), "A critical analysis of Somalia’s current antimoney laundering and counter financing of terrorism regime: a comparative study with Malaysia", Journal of Money Laundering Control, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JMLC-05-2023-0090
Publisher
:Emerald Publishing Limited
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