Somalia has long confronted the persistent threat of Al-Shabaab, a militant group that emerged from the remnants of the Islamic Courts Union in 2006. Exploiting the absence of a strong central government, the group entrenched itself across southern Somalia, imposing a brutal interpretation of Sharia law while sustaining its operations through extortion, illicit taxation (under the guise of Zakat), and covert financial networks. Recognizing the need for a comprehensive approach, the FGS has prioritized financial warfare as a cornerstone of its counterterrorism strategy.
Since the onset of President Hassan Sheikh Mohamud’s second term in May 2022, the Federal Government of Somalia (FGS) has intensified its counterterrorism strategy, targeting Al-Shabaab’s ideological, military, and financial infrastructure. This article examines Somalia’s key achievements in disrupting terrorist financing from May 2022 to July 2025, highlighting legal reforms, operational successes, and strategic advancements in anti-money laundering and countering the financing of terrorism (AML/CFT).
1. Establishing a Robust Legal and Institutional Framework
In response to President Hassan Sheikh Mohamud’s declaration of financial war against terrorist organizations, the Federal Government of Somalia has implemented key legal and institutional reforms to protect the financial system and dismantle the funding structures of extremist groups, particularly Al-Shabaab.
Central to these reforms is the revision of the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Act 2016, which was updated to incorporate previously missing requirements and ensure alignment with FATF Recommendations. The revised Act strengthens the authority of the Financial Reporting Centre (FRC), financial institutions, and law enforcement agencies to detect, report, and prosecute money laundering and terrorist financing offenses.
To further reinforce the legal framework, two critical laws were enacted in 2023:
I. Counter-Terrorism Law (2023):
Expands investigative and prosecutorial powers, authorizes the freezing and confiscation of terrorism-related assets, and permits the use of financial intelligence as admissible evidence in court.
II. Targeted Financial Sanctions (TFS) Law (2023):
In accordance with UNSCRs 1267 and 1373, this law allows the designation of terrorist individuals and entities, mandates immediate asset freezes, and prohibits any financial or material support.
2. National AML/CFT Coordination Mechanism
The Federal Government of Somalia has established a coordinated national response to terrorist financing through the National Anti-Money Laundering and Countering the Financing of Terrorism Committee (NAMLC). As the primary AML/CFT policy body, NAMLC plays a central role in protecting Somalia’s financial system from exploitation by terrorist groups, particularly Al-Shabaab.
In fulfilling its mandate, NAMLC has issued several public directives urging citizens and financial institutions to avoid providing financial or material support to terrorist entities and to report suspicious transactions to the Financial Reporting Centre (FRC).
A major milestone was the release of Somalia’s first and second domestic sanctions lists in April and July 2024, under Article 6 of the Targeted Financial Sanctions Act (2023). These lists designated 17 senior Al-Shabaab operatives involved in fundraising, logistics, propaganda, and extortion. The designations triggered immediate asset freezes and prohibited any financial dealings by reporting entities.
Following these sanctions, Somali National Army operations in late 2024 and early 2025 resulted in the deaths of three listed individuals in Hiran, Bay, and Lower Shabelle:
• Mohamed Mire Jama (Mire)
• Nur Hassan Roble (Nuunale)
• Bakar Sharif (Baashe)
3. Operational Milestones
In line with President Hassan Sheikh Mohamud’s declaration of financial warfare, the Federal Government of Somalia has taken decisive operational steps to dismantle Al-Shabaab’s financial infrastructure by targeting income sources, fund movement, and storage mechanisms.
Through coordinated efforts by the Financial Reporting Centre (FRC), Central Bank of Somalia, financial institutions, and telecom providers, authorities launched a nationwide campaign to disable financial channels exploited by the group. This included:
• Freezing bank and merchant accounts linked to terrorist financing
• Blocking mobile money numbers used for extortion, intimidation, and storage of illicit proceeds
According to government media, between May 2022 and June 2025, approximately 3,000 accounts and mobile wallets were frozen or closed, significantly disrupting Al-Shabaab’s financial operations.
These actions contributed to an estimated 30% decline in the group’s annual revenue, marking a pivotal shift in Somalia’s counter-terrorism strategy and highlighting the critical role of financial enforcement in degrading terrorist capabilities.
4. Somalia’s First Terrorist Financing Convictions (May 2024)
In May 2024, Somalia secured its first-ever terrorist financing convictions, marking a historic milestone in the transition from financial intelligence to successful prosecution. These rulings established a critical legal precedent and demonstrated the growing maturity of Somalia’s AML/CFT regime.
The convictions were the result of close coordination between the Financial Reporting Centre (FRC), National Intelligence and Security Agency (NISA), the judiciary, and the Office of the Attorney General (OAG), transforming complex financial intelligence into legally admissible evidence.
On May 17, 2024, the Banadir Regional Court sentenced Ali Hussein Isak (70 years old) to seven years in prison and imposed a $3,000 fine for financing activities linked to Al-Shabaab. Shortly thereafter, Ayan Abukar Mohamed (27 years old) was sentenced to eight years in prison and fined $8,000 for facilitating terrorism-related financial transactions.
5. Somalia’s First National Risk Assessment
The Federal Government of Somalia has adopted a risk-based approach as a foundational principle in its efforts to combat money laundering (ML) and terrorist financing (TF). This approach enables the prioritization of resources, policy decisions, and enforcement actions in proportion to the identified risks, ensuring a more targeted and effective national AML/CFT response.
A key milestone in this effort was the completion of Somalia’s first National Risk Assessment (NRA) in 2022. This assessment marked a critical step in aligning Somalia’s AML/CFT framework with the Financial Action Task Force (FATF) Recommendations. The NRA provided a comprehensive evaluation of ML/TF threats and vulnerabilities, identifying high-risk sectors, institutional weaknesses, and systemic challenges. The findings of the NRA have informed strategic decision-making, enhanced supervisory focus, and guided the development of national policies and capacity-building programs.
In a complementary move to address identity-related vulnerabilities, the National Anti-Money Laundering Committee (NAMLC), in collaboration with the Central Bank of Somalia (CBS) and the National Identification and Registration Authority (NIRA), issued a directive on 29 July 2025 mandating the use of National Identification (ID) for the opening and renewal of bank accounts. This directive represents a major advancement in strengthening financial sector safeguards against misuse by criminal and terrorist actors.
The National ID enforcement directive will achieve the following:
• Close critical loopholes exploited through fraudulent or unverifiable identities.
• Enhance Know Your Customer (KYC) and Customer Due Diligence (CDD) compliance.
• Improve the traceability and accountability of financial transactions.
• Expand the accessibility of ID services across the country through regional and mobile registration centers.
6. Regional and International Cooperation
Somalia continues to strengthen its regional and international engagement in the fight against money laundering and terrorist financing. As an active member of the Middle East and North Africa Financial Action Task Force (MENAFATF), Somalia is currently undergoing its Mutual Evaluation Process, which assesses both technical compliance with the FATF Recommendations and the effectiveness of its AML/CFT regime. This evaluation serves as a catalyst for legislative reform, institutional strengthening, and enhanced alignment with international standards.
Somalia is also pursuing membership in the Egmont Group of Financial Intelligence Units, a global network that enables secure exchange of financial intelligence. In support of this objective, the Financial Reporting Centre (FRC) has made significant progress in reinforcing its legal and institutional frameworks, as well as enhancing its capacity to collect, analyze, and disseminate financial intelligence.
To deepen regional collaboration, the FRC has signed Memoranda of Understanding (MoUs) with several counterparts FIUs. These agreements facilitate timely information sharing, joint analysis, and technical cooperation—critical for identifying and disrupting cross-border illicit financial flows and addressing shared threats more effectively.
7. Strategic Recommendations for Somalia’s Counter-Terrorist Financing Efforts
To consolidate recent progress and address evolving threats, Somalia should focus on the following strategic priorities:
Promote Public Awareness and Community Engagement.
Enhance Inter-Agency and Public-Private Collaboration
Build Institutional and Technical Capacity.
Persistent Sanctions Targeting Al Shabaab Leaders
Leverage Technology and Regulate Emerging Risks
Strengthening International Cooperation
8. Conclusion
Somalia has made substantial progress in disrupting terrorist financing through legislative reforms, institutional strengthening, and coordinated national and international efforts. Key achievements—such as the first terrorist financing convictions, targeted sanctions, and the closure of thousands of illicit accounts—reflect a proactive and strategic approach to financial disruption.
The implementation of a risk-based framework, enforcement of national ID requirements, and alignment with global AML/CFT standards have significantly enhanced financial transparency and control. Continued investment in technology, regulation of virtual assets, and cross-sector collaboration will be vital to sustaining momentum.
With strong political will and a forward-looking strategy, Somalia is building a more resilient financial system and contributing meaningfully to global counter-terrorism efforts.
Author:
Abdiwahab Mohamed Abdurahman
Senior AML/CFT Analyst and Financial Crime Investigator
Somalia Financial Reporting Centre (FRC)
