The past two years have seen closure of bank accounts of Somali remittance companies by many banks in the US, UK, Canada and Australia due to the purported risk of money laundering and links to terrorism.
The World Bank started working with the UK in 2015 to develop mechanisms in case of severe disruption of remittances flows between the UK and Somalia, but the Bank is now working with the Federal Government of Somalia to ensure the continued flow of remittances, a critical source of income to people in the Horn of Africa country.
Activities are currently focused on formalizing and improving the transparency and compliance in Somalia’s money transfer business sector, and the World Bank has appointed management consulting firm Abyrint as the Central Bank of Somalia’s (CBS) ‘Trusted Agent’ to regulate and supervise money transfer businesses.
Remittances to Somalia support 23 per cent of the GDP and were estimated to reach a total of $1.4 billion in 2015.
Abyrint helps to rebuild institutions and systems, especially finance governance, in failed or fragile states.
“The deployment of the Trusted Agent is a critical step toward improving supervision and formalizing the money transfer business sector in Somalia,” said Bella Bird, World Bank Country Director for Somalia, Tanzania, Burundi and Malawi.
Abyrint and CBS staff will conduct joint on-site and off-site supervision of registered and licensed remittance companies and work to build capacity within the CBS Department of Licensing and Supervision.
The World Bank is also assisting the CBS to draft and implement new regulations and guidelines for the money transfer business sector, within the new regulatory regime established under the AML/CTF Bill passed in April this year.
Phil Evans, Head of the UK Department for International Development (DfiD) Somalia added: “Ensuring that the Diaspora is able to safely and cost-effectively send money home to families remains vitally important, given the lifeline that money represents for many in Somalia.”
Abyrint was selected through a publicly advertised and competitive process.