Somalia's new strategy to defeat Al-Shabaab

MOGADISHU, Somalia - For almost two decades, Al-Shabaab fighters have imposed punitive taxation measures in central and southern regions, with the group’s financial fortunes expanding over time even as the government tries to seal loopholes used by the militants.

Through annual taxation of about $120 million, the Al-Shabaab fighters have managed to purchase sophisticated weapons besides ensuring timely payments of the fighters, and smooth operations without major interruption.

As a result, the government has come up with strict rules on financial regulations, besides fighting the militants through military combats and a religious approach, which entails seminars to discuss radicalization.

Among others, the government has established a robust legal and institutional framework. 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, state media highlights.

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).

There have been deliberate efforts to also support financial operations 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), the Central Bank of Somalia, financial institutions, and telecom providers, authorities launched a nationwide campaign to disable financial channels exploited by the group. This included:

Further, 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.

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.

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.

GAROWE ONLINE