Somalia remittance firm fights money laundering claims

A client at an Amal Express outlet in Mogadishu, Somalia.

Photo credit: Courtesy

What you need to know:

  • The company, which runs the semi-formal transfer service known as Hawala in most East African countries, says it has always followed local laws and standards, including limits on the amounts of money to be sent by individuals.
  • The company is reacting to a report by Geneva-based Global Initiative Against Organised Crime (GI-TOC), which claimed a number of Hawala service providers including Amal had been used to settle illegal payments to arms dealers in Yemen.

Somalia’s money remittance firm Amal Express says it is open to an audit by regulators to prove it has not aided money laundering for purchase of illegal arms.

The company headquartered in the UAE, which runs the semi-formal transfer service known as Hawala in most East African countries, says it has always followed local laws and standards, including limits on the amounts of money to be sent by individuals.

“We reiterate our long-standing commitment to upholding our corporate integrity and full compliance with laws and regulations in all the countries we operate in,” Guleid Jama, the firm’s Chief Executive Officer, said in a statement on Friday.

“We have invited the Central Bank of Somalia, our regulators, to audit our internal systems regarding the alleged dealings with blacklisted persons. We expect the findings of the independent audit would be made public.”

The company is reacting to a report by Geneva-based Global Initiative Against Organised Crime (GI-TOC). Published in September, the report claimed a number of Hawala service providers including Amal may have allowed transactions to settle payments to individuals sanctioned by the US Treasury. Those payments, amounting to $40,000 may have been used to pay illegal arms dealers in Yemen.

With Somalia under an arms embargo since 1993, any purchases of arms could be both illegal in the country and the region, given the UN Security Council's resolutions that are binding to all member states where Amal is licensed to operate.

Thresholds surpassed

The report titled "Following the Money", authored by former UN Expert panellist for Somalia, Jay Bahadur, analysed transactions for money transfer operators (MTOs) amounting to $3.7 million between 2014 and 2020, sent via MTOs Iftin, Amal and Dahabshiil.

It detected two payment batches of about $40,000 in total, which the operators should have stopped as per US sanctions on the recipient individuals. And Somalia’s port city of Bossaso in Puntland state was the origin of most of the illegal payments to arms sellers in Yemen.

No suspicious transactions were found on the part of Dahabshiil while Amal was particularly accused of handling cash sent to Abdulrab Salem al-Hayashi, who was in October 2017 sanctioned by the US Treasury.

He was sanctioned for “assisting in, sponsoring, or providing financial, material or technological support for, or financial or other services to or in support of” Al-Qaeda-linked terror groups in the Arabian Peninsula.

Amal rejected claims it transferred money to such an individual and refutes a copy of the receipts published in the report.

“The document was not authentic. It was a very poor imitation of our real receipts and had several inconsistencies and formatting mistakes. We proved [this] to the author of the report when he sought to establish its authenticity, before the report's publication," the CEO said.

“As we speak, auditors from the Somalia Central Bank are in Bossaso and they have been given adequate access to our systems to verify for themselves that our systems have stringent checks,” Jama told the Nation when asked about the company’s know-your-customer rules."

On Monday, GI—TOC said it stands by the accuracy of the report’s findings “and the authenticity of the remittance slip disputed by Amal Express.”

“The research process involved the years-long collection of hundreds of MTO remittance receipts, including 63 relating to transactions conducted through Amal Express.

“The remittance receipts were supplied by multiple independent sources who were well-placed to guarantee their authenticity,” the organisation said in a statement.

GI-TOC said it contacted Amal to comment on specific transactions with question marks but “received no subsequent communication from Amal Express either prior to or following the publication of the report.”

The organisation said there was no evidence the money transfer operators directly violated UN sanctions on arms embargo, but may have failed to flag questionable payment to an individual sanctioned by the US Treasury.

Little scrutiny

Somalia’s Hawala system has been influential in reaching millions of people who remain largely unbanked. According to local regulations in Somalia, individuals can send or receive up to $300 without undergoing rigorous background checks through mobile payments.

Many Somalis receive payments sent via MTOs through their mobile phones even though MTOs and mobile money services are run by different entities.

But Somalia doesn’t have national ID data and the Global Initiative report claimed some senders and receivers may have used variations of their names to dodge scrutiny.

The organisation did admit that the complex number of networks involved in wiring and final payment of the money may make it difficult for parent companies to detect errant partners.

“As a result, parent companies may often be unaware of lapses in anti-money laundering/countering the financing of terrorism (AML/CFT) compliance amongst its agents or franchisees. 

“GI-TOC stands ready to meet with representatives of Amal Express and/or Iftin Express to share the details of the report’s findings and its recommendations on addressing AML/CFT compliance gaps.”

Amal officials told the Nation they cooperate with authorities and use a system called World-Check to flag transactions involving persons listed as high risk.

The World Bank estimates that just about 15 per cent of the 15.5 million Somalis have bank accounts, leaving the Hawala system as the main service for transmitting the estimated $1.3 billion sent by the Somali diaspora every year.

It advised the Somali government to begin developing a robust identification system to eliminate the loopholes.

“An effective identification system would help narrow the significant financing gap in Somalia and address de-risking issues,” it said in a report titled "Rapid Growth in Mobile Money".

“Better mobile money regulation and a robust identification system are closely connected and need to be developed in parallel.”

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