Q-Tell us a little about yourself?

A. My name is Abdirizak; Somalia’s NRA Report 2020 Coordinator. I have worked with the Somalia Financial Institutions including commercial Banks and MTBs over six years in Somalia. I have a long-term background and experience in Investment Banking and in Anti Money Laundering and Combating Financial Terrorism (AML/CFT). I have earned my first degree of Economics from George Mason University in Virginia, Fairfax, USA in 1986-1987.

Q. Your experience working in AML/CFT?

A. I was introduced to AML in 1990 when I was working with TD Canada Trust in Canada as a Junior Treasury Accounting section. At that time, Counter Terrorist laws didn’t exist. In 2001 the USA Introduced the Patriot Act and it became into effect in April 2002. During 2002 to 2006, I had the opportunity to work with Somali Money Transfer businesses operating in the US. From 2002 to 2006, I worked with the Somali Money Service Businesses (MSBs) in USA and Canada. I was a frequent traveller from Canada to the USA during this period. I have developed a dedicated AML/CFT policy and procedures for each MSB Company. In addition, I have worked with them to develop MSB business concepts that was in line with USA/Canada MSBs requirements. Somali Money Transfer Businesses (MTBs) operating in USA and Canada and their agencies become aware that they are the principal originators of remittances services on behave their clients and agencies, whereas their Clearance and forwarding companies in Dubai are their Agencies. Moreover, the main focus was for MSBs to comply with the new USA/Canada laws and regulations and the consequences of breaching the laws and its regulations may severely impact them and their businesses.
Fortunately, it was supportive that MSBs companies were receptive and their responses in complying with the laws were positive. End of 2006, I stayed permanently in Canada and my business focus was to conduct AML/CFT external review for MSBs. This time, I have expanded my business to other ethnic Canadian MSBs.
In mid-2016, I relocated to Mogadishu, Somalia. I was hired by the Central Bank of Somalia, as a consultant to support the Bank with its Supervision and Licensing Department. I worked with the country’s new commercial Banks and MTBs, in which the Somali remittances sector were facing de-risking in North America and Europe Account closures. While I have taken several different roles, my specific job assignment was to help the new banking system in Somalia to get into the global standard in the Anti Money Laundering Combating the Financing of Terrorism Act (AML/CFT). Country’s financial reform with the support of IMF/WBG was part of the Debt Relief process. CBS has met the Bank’s financial reform/SMP requirements.
After four years with the Central Bank of Somalia, I joined the Financial Reporting Centre (Country’s FIU) In March 2020. I have taken the role of Somalia’s National Risk Assessment coordinator program.

Q. Give us information about the NRA report and what are its advantages for Somalia?

A. Before I respond to the main NRA Report advantages for Somalia, according to Financial Action Task Force (FATF) Recommendation 1, countries are required to assess their ML/TF risks. Assessing risk means how much a country is complying with AML/CFT standards and practice. While assessing their countries’, that they must identify the threats that exists and how vulnerable they are to those ML/TF threats. For instance, if you have corruption issues or human trafficking, these are pandemics that exists globally, therefore AML/CFT will simply assess, identify areas that a country is vulnerable, whether its technical side, or technical soundness of the country. For example, the comprehensiveness of the laws that exists in Somalia to address those identified threats. Another example can be Asset forfeiture laws how those laws are effectively utilized when dealing with financial crime offenses. Thus, if the country is technically sound, that means country’s law enforcements have legal powers. Moreover, the police force, or financial crime taskforce and the judicial system have the powers of legal systems to prevent and protect and having the capabilities to prosecute financial criminals or ML/TF offenders. More assessment examines how effective the legal powers are utilized by the Law Enforcement Authorities (LEAs) and Judicial system; by presenting data, for instance, numbers of criminals or ML/TF offenders are prosecuted, cases charged etc. One of the benefits of the NRA report is clearly demonstrated the threats and vulnerabilities of the country in AML/CTF to align the country to the global standards as stated by FATF. The other benefit is for the country to identify areas that they have gaps to eventually align with global standards. Consequently, the country knows exactly through careful assessment where they are and how far they are away from the system of global standards. Which will give the country the ability to build the next step, developing a strategic guideline that will work on bridging those identified gaps. In additions, the country establishes a scheduled timeline to gradually resolve their deficiencies. Accordingly, when someone is interested to know the ML/TF risks aspects of Somalia’s financial system, it becomes easier to know that Somalia has identified the country’s ML/TF risks and have a roadmap to resolve those issues. Many advantages are within that line. The second line of benefits is National Risk Assessment Report with the report’s subsequently publication was a trigger point for the debt relief for Somalia. Furthermore, Somalia’s stakeholders have welcomed the completion of the NRA Report and want to see Somalia taking steps to address their ML/TF risks, so the country’s financial system is not a threat to the global financial systems. The NRA report is subject to revisions informing global financial institutions including investor country’s ML/TF risk levels.

Q. How many parts are there of the report?

A. depending on the country’s economy and size of its financial systems, NRA report carries lots of information that readers or audiences are interested in a detailed report, which only contains the most relevant information. the report contains number of components; therefore, its length is not an issue. Different stakeholders are interested in specific components of the NRA report. Moreover, there are readers who may read the executive summary. The second component is the Methodology or the Introductions which explains the process used to prepare the NRA report. Because there are procedures that must be followed for the reader to understand the way the Working Groups have combined the information, targets, how the NRA Report components are arranged. For instance, the execute summary, the report showcase ML/TF risks and vulnerabilities, whether the risks faced by the jurisdiction is rated as high, low, or medium high. The report goes on to state the level of threats, compared to country’s vulnerability, resulting risks exposed and the level of country’s combating ability, which is expected, existing risk mitigation strategies commensurate the threats identified.
The sectors whose vulnerabilities are analysed for possible abuse and conduct of illicit finance, are country’s financial services institutions both banking and non-banking financial services including MTBs. The designated non-financial Businesses and Professionals “DNFBPs” including Real Estate companies their agents, lawyers and their associations, Gold/Silver and Precious stones dealers. Those are collectively known as Reporting Entities. They are expected to fully comply with country’s AML/CFT law and all relevant regulations. The NRA report analysed the reporting entities vulnerabilities, including how those entities are regulated and how reporting entities are meeting their AML/CFT compliance obligations. The quality of their reporting and how closely they are working with their regulators; specifically, with working with the FRC and CBS, which are important input factors determining the level of country’s AML risks.
Another important component of the NRA is the NPO/NGO activities in the jurisdiction, whether the country’s non-profit organization are following AML/CFT laws and meeting their obligations. As for as FATF Recommendations, NPO/NGO should be rightly regulated to prevent the misuse of the sectors for illicit financing or that terrorists or money launderers take advantage of these type of institutions. Stakeholders including foreign investors are generally interested in reading the executive summary and certain sections of the document, specifically there are some readers who will examine how Somalia’s non-profit organizations are managed.
the last section is financial inclusion. Financial Inclusions are same as NPOs, to reduce country’s poverty levels. Disadvantaged groups such as consumers in the rural areas and IDPs must have access for banking services, such as access for loan. Authorities should promote access for banking to those groups. Basic IDs and background information database must be created for those groups. Therefore, simplified identification process must be applicable for them to access the financial services and products. Emerging E-banking and mobile money transfers (MMT) have given them the opportunity to receive and remit funds, but in the absence of past credit records, background, and assets to use for a collateral prevent them to have access for loans. Moreover, authorities must protect the Financial Inclusion qualifying groups from misuse of illicit financing.
Finally, the report covers terrorist financing. Terrorist financing has infiltrated in some areas of the jurisdiction’s economic system in a more effective way. Awareness and preventive measures must be used to mitigate TF growing risks, including educating the public about ML/TF risks and neighbourhood watch. Terrorism financing cases must be punished, and anyone associated with terrorist or have business relationship should be severely punished. Moreover, authorities must have legal powers to confiscate Funds suspected of Terrorism.

Q. Can you tell us the different stages the NRA report went through when it was being developed?

A. When developing a report of this kind, generally there are ready made methodologies prepared by multinational organizations; the World Bank and IMF for use of country’s assessing their countries’ risk situations.
FRC has used the World Bank method. IMF has proposed for the FGS to conduct NRA as part of Somalia’s debt relief program, (CP HIPC, Trigger TB completed April 2021). The completeness of the modules and gathering and input data and material information were the responsibilities of the WG, representing different Ministries and agents across Somalia. Each work was led by a representative from an agency or Ministry. There are 7 Working Group leaders. The working group leaders were responsible to write the conversation and discussions of the working groups. The collective information, materials and data gathered are the formation of the NRA report 2020.

Q. Why the NRA report at this time?

A. First, the report was due to be completed April 2021 but there were many gaps in data so what we did was for us to meet the requirements. FRC has forwarded a functional NRA draft report to IMF to meet the required deadline. FRC had the opportunity to finalize the NRA report by gathering information from working group participants. Consequently, the NRA Report was revised and updated and has been completed end of 2021. However, it took several months during 2022 for the WBG to respond to FRC but once the NRA report was finalized, it become necessary for the IMF triggers to be published as of the FGS Budget release.

Q. When do you think Somalia will publish another NRA report and what is your expectations?

A. My expectations are that towards 36 months from now a revised NRA report can be produced. Hopefully, the country will be more prepared, and the time needed to complete the report will be much shorter. My prediction is Somalia will have a better understanding of their risks and vulnerabilities and how to seriously address those exposed risks.

Q. What is your advice to the financial institutions?

A. Financial institutions represent the country’s economic activity, majorly FI are economic backbone of the country. Mainly funds are cleared through financial services industry, trade activities and real transactions go through them. For the past six years the FI have gained lots of knowledge in AML/CFT and training program including establishing and designating a qualified AML/CFT compliance team for each FI. However, the downside of such past events, FI should not have been alone in the country’s ML/TF risks awareness. The exposure should have been on national level by expanding the training and awareness program to the LEAs and country’s judicial system. However, once the NRA report is published it shed light that the banking sector has an opportunity to share their knowledge and spread their AML/CFT preventive measures to the public. FI institutions will receive a positive response from consumers and authorities. It became easier for FI institutions to operate a less ML/TF risks and regulated environment.

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