Exclusive: Suspected arms dealers moved millions of Somali money transfers

NAIROBI – Somali money transfer companies have moved more than $ 3.7 million in cash between suspected arms dealers in recent years, including to a Yemeni under U.S. sanctions for alleged militant links, according to a report seen by Reuters.

The findings of a Geneva-based research group, the Global Initiative Against Transnational Organized Crime, could further complicate Somali transfer companies’ attempts to maintain access to international banking services.

Although they provide a lifeline to millions in the Horn of Anarchic Africa, only a few banks will do business with them because of the risk of being rejected by international transparency and anti-money laundering rules.

Asked about the report, Somalia’s central bank, which regulates money transfer companies, said it was not aware of the transfers but wanted to investigate and generally made progress in combating terrorist financing.

The four companies contacted by Reuters said they were doing their best to comply with global “know your customers” standards, even though Somalia had no national identity card. The companies also said they maintained databases of internationally sanctioned individuals.

The Global Initiative analyzed nearly six years of transaction records from the city of Bossasso and matched them with cell phone records from security sources and database searches.

The report identified 176 transactions from the last six years that it said appeared to be linked to suspected arms dealers in Somalia and Yemen. Nearly two-thirds were above the $ 10,000 threshold that should trigger an automatic report to regulators.

They include two transfers totaling nearly $ 40,000 to numbers linked to Sayf Abdulrab Salem al-Hayashi after the US Treasury Department sanctioned him in 2017 for allegedly providing weapons and financial support to al Qaeda in the Arabian Peninsula and the Islamic State. in Yemen, the report said.

Al Hayashi could not be reached for comment.

Somali-based Amal Express and Iftin Express handled the transactions, using different combinations of his name and nickname, the report said.

Amal Express said a transfer slip shown in the report and allegedly linked to al Hayashi was a forgery. Iftin Express declined to comment on individual transactions.

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The report found no cases where the other two companies, Dahabshiil and Taaj, made transfers to sanctioned individuals. But it noted the case where individuals were able to make transfers with them using multiple names and numbers, which is a violation of Somali law.

One man used 24 names between the four companies, the report says.

All four companies said they did not allow customers to use multiple identities or phone numbers. Dahabshiil also said that it has stopped making transfers between Somalia and Yemen.

The companies did not say whether the six men mentioned in the report are found in their databases.

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Apart from al Hayashi – the only one under US sanctions – three others, whose names appear in the suspected transactions, were identified as suspected arms dealers in public reports by the UN panel of experts on Somalia.

Two were marked – one as a proxy for al Hayashi and one as an arms deal – in a confidential annex to a report from the same panel from 2018.

Few Somalis have bank accounts. Money transfer companies – often known as Hawaiians – are important for economic activity and the provision of humanitarian aid.

Cutting companies off from banking is not the answer, said the report’s author, Jay Bahadur, former head of the UN panel of experts. “Excluding companies from international banking services will penalize families who trust them and drive underground economic flows,” he said.

But he said the companies need to ensure that their agents comply with money laundering legislation and the Somali authorities need to improve enforcement.

“Financial regulators in Somalia are understaffed, do not have the resources and they do not trust domestic financial institutions,” he told Reuters. “They receive limited reporting data and are not able to take many actions with what they receive.”

Abdirahman M. Abdullahi, governor of Somalia’s central bank, said cooperation was improving. Somalia is working with the World Bank to develop a national identity card, he told Reuters.

He said arrests had been made for violating anti-money laundering and terrorist financing legislation, citing the case of a trader convicted in August of running an unregistered bank.

The Financial Reporting Center, a Somali government watchdog, did not respond to requests for comment.