Illicit Finance in Somalia

Somalia is a poster child for a renewed focus on international money laundering and counter-terrorist financing policy efforts.  Recent reports indicate that the terrorist group Al Shabaab is largely funding itself with the proceeds of charcoal exportation and has begun to collaborate with other terrorist groups on the African continent.  The highly lucrative and legal charcoal trading practice has provided the group with upwards of $25 million in revenue over the past several years and it is highly unlikely that the trade will end anytime soon.  It is only a matter of time before collusion with criminal groups proves equally profitable as well.

As crime and terror groups converge into a financially diverse and dangerous hybrid– the United States needs to develop a comprehensive anti-money laundering and counter terrorist financing (AML/CFT) strategy that is capable of targeting this style of threat group.  Existing AML/CFT legislation is based on a bricks and mortar premise that surmises all transactions must be tied to a physical location.  Technological innovations and the advent of mobile banking, mobile money transfer, and bitcoin make it possible to engage in financial transactions anywhere at any time.

Forcing the current Western centric AML/CFT measures upon a nation state like Somalia would be shortsighted and not without serious consequence; it’s time to go back to the drawing board.


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