A 2013 investigation uncovered a significant daycare fraud scheme in Somalia, revealing that sham centers were generating millions annually through systematic deception. The scheme operated through coordinated falsification of parental work records, enabling participants to extract substantially larger subsidy payments than legitimate beneficiaries.

More critically, internal audit trails exposed that portions of these subsidy funds—resources originally allocated for childcare necessities—were diverted through restaurant operators. The financial flows subsequently supported terrorist-designated organizations, creating a direct pipeline from social assistance programs to extremist financing.

This case demonstrates how inadequate verification systems and weak institutional controls over fund disbursement can create vulnerabilities exploitable for both financial fraud and illicit activity.