About The Bill

This draft bill on the amendment to the Financial Institutions Law has nearly completed its passage through both Houses of the Somali Federal Parliament during the 6th Plenary session and has received the formal presidential assent, marking a significant milestone towards its enactment. The law aims to modernize the regulatory framework governing financial institutions in Somalia, ensuring greater oversight, risk management, and operational transparency. Its approval reflects a strong commitment by Somali lawmakers and the executive branch to enhance the stability and integrity of the financial sector. The bill introduces comprehensive provisions that define licensing, supervision, and conduct standards for a broad range of financial entities including banks, microfinance institutions, foreign banks, Islamic banking entities, and money transfer operators. Key features include stringent requirements on capital adequacy, risk assessment and mitigation measures, detailed governance structures, and measures to prevent money laundering and financial crimes. It establishes clear oversight powers for the Central Bank to issue licenses, enforce compliance, investigate irregularities, and take corrective actions, making sure financial institutions operate safely and protect depositors' interests. If implemented effectively, this legislation will have a transformative impact on Somalia’s financial landscape. It will enhance investor confidence, facilitate financial inclusion especially for underserved groups like small businesses and rural communities, and boost economic growth by ensuring a secure and transparent banking environment.