Yemen Country Summary

FATF Status

Yemen is currently on the FATF List of Countries that have been identified as having strategic AML deficiencies

Latest FATF Statement - 21 February 2025

Since February 2010, when Yemen made a high-level political commitment to work with the FATF and MENAFATF to address its strategic AML/CFT deficiencies, Yemen has made progress to improve its AML/CFT regime. In June 2014, the FATF determined that Yemen had substantially addressed its action plan at a technical level, including by: (1) adequately criminalising money laundering and terrorist financing; (2) establishing procedures to identify and freeze terrorist assets; (3) improving its customer due diligence and suspicious transaction reporting requirements; (4) issuing guidance; (5) developing the monitoring and supervisory capacity of the financial sector supervisory authorities and the financial intelligence unit; and (6) establishing a fully operational and effectively functioning financial intelligence unit. While the FATF determined that Yemen has completed its agreed action plan, due to the security situation, the FATF has been unable to conduct an on-site visit to confirm whether the process of implementing the required reforms and actions has begun and is being sustained. The FATF will continue to monitor the situation, and conduct an on-site visit at the earliest possible date.

Compliance with FATF Recommendations

It should be noted that the new style FATF Mutual Evaluation has not yet been undertaken.

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Yemen was undertaken by the Financial Action Task Force (FATF) in 2008. According to that Evaluation, Yemen was deemed Compliant for 0 and Largely Compliant for 4 of the FATF 40 + 9 Recommendations. It was Partially Compliant or Non-Compliant for 5 of the 6 Core Recommendations.

Yemen faces significant challenges related to various criminal markets, including human trafficking, arms trafficking, and drug smuggling, exacerbated by ongoing conflict and weak governance. Vulnerable populations, particularly refugees and children, are at high risk of exploitation, while organized crime networks operate with the complicity of state actors. The fragmented justice system and limited resources hinder effective law enforcement, contributing to widespread corruption and a struggling economy reliant on international aid.

Yemen's economy is classified as low-income and is heavily reliant on oil and gas, which significantly contribute to government revenue. The ongoing civil war has led to a severe decline in GDP and widespread poverty, with approximately 75% of the population requiring humanitarian assistance.

The investment climate in Yemen is severely hindered by ongoing conflict, political instability, and inadequate infrastructure, creating a challenging environment for foreign investors. The humanitarian crisis and high levels of corruption further deter investment opportunities, leaving many sectors underdeveloped and risky. Despite these obstacles, Yemen's strategic location and natural resources, particularly in oil and gas, present potential investment opportunities, although significant foreign engagement is unlikely until security and political stability are restored.