Despite a 1992 UN arms embargo and rising prices, individuals from both the new transitional federal government and opposition groups are buying up the illegal weapons, according to the latest report from the monitoring group on Tuesday.
While demand for financing has soared, buyers are finding the money inside and outside the northeast African nation from sources ranging from illegal charcoal exports and printing counterfeit currency to school fees and looting, the report by the group of four outside experts said.
The group recommended tightening controls along Somalia's borders and coastline. It said neighbouring countries should coordinate better and share information to improve their effectiveness.
The monitoring group turned over to the UN Security Council a sealed draft list of arms embargo violators, in the event the council plans future enforcement measures.
A country of around 10 million people, Somalia has been carved up into fiefdoms run by rival militias since 1991. A transitional federal government was formed in neighbouring Kenya last year and is trying to establish itself inside Somalia.
But the monitoring group gathered information, documents and pictures showing that despite the new government, "or perhaps because of it, arms embargo violations continued to occur at a brisk and alarming rate".
It said the arms shipments easily circumvented neighbouring states' efforts to block them.
With most of the weapons flowing to opposition groups, "there is a seriously elevated level of threat of possible violence against the peaceful establishment in Somalia of the transitional federal government", the group said.