Introduction

Anti Money laundering promotes criminality and corruption. It dampens economic development in every nation.  Because such markets are always attempting to develop their economies and financial sectors. As a result, they are appealing to victims of money laundering.

Global anti-money laundering and anti-terrorism funding legislation aims to tackle this situation. This is to prevent the adverse economic effects that might be examined in a number of settings. Money demand, growth rates, income distribution, tax revenues, and financial institutions are all factors to consider.

Evolving AML definition

Terrorism, terrorist activities, funds of criminality, specified non-financial organizations, and occupations were all specified by the legislator. The Financial Action Task Force (FATF) classifies these as real estate brokers. Valuable metals merchants Exotic stone merchants’ Legal experts (litigators, registrars, other unaffiliated legal specialists, and accountants), financial groupings, and sham financial institutions. The legislator attempted to broaden and enlarge the terms. This is also done in order to comply with the worldwide guidelines and requirements of the Financial Action Task Force (FATF). The FATF Guidelines are widely recognized worldwide standards. They help in combating money laundering and terrorism funding. Transparency increased by the standards. It also helps nations to effectively combat illegal financial system usage.

Anti-money laundering (AML) relates to the network of rules, guidelines, and processes. These are designed to detect attempts to camouflage criminal payments as lawful revenue. Money laundering aims to obscure offenses spanning from minor evading taxes and narcotics trafficking to governmental wrongdoing. It also includes the funding of terrorist organizations.

The AML law was enacted in reaction to the expansion of the financial sector. Also the relaxation of global capital restrictions and the increasing simplicity with which complicated networks of financial operations could be conducted.

According to a high-level United Nations group, yearly money laundering movements amount to $1.6 trillion. It represents 2.7 percent of worldwide GDP in 2020.

Qatar and Anti Money Laundering

According to the scope of the legislative amendments implemented, Qatar is clearly eager to demonstrate that it has undertaken the required measures to remedy the weaknesses in its AML/CTF regime noted by the FATF in its last Mutual Evaluation Report (‘MER’).

Qatar AML laws Propagating Anti-Money Laundering and Trying to combat Terrorist Financing (‘AML Law’) went into force in September 2019. It is the first solo revision to Qatar’s AML/CTF regime in over a decade. It superseded Law No. 4 of 2010, with an emphasis on applying worldwide best practices.

The AML law requirements mentioned had a purpose.The intention is to utilize the same terminology and architecture as the FATF 40 Guidelines. This is to guarantee that domestic legislation reflects the full scope of the FATF criteria. From a top standard, the new laws are also geared toward giving agencies more breadth and greater authority. This is for the purpose of prosecuting money laundering and terrorism funding violations.  It contributes to the expansion of criminalizing activities. It also contributes to the authorities’ capacity to collaborate with foreign peers in cross-border operations.

Revision of the Anti Money Laundering Law

While the revision of its regulations is a significant step forward for Qatar. Many of the clauses are re-enactments of policies that have previously been put in place in other nations. They adopted at a later phase in the process of entrenching AML/CTF safeguards in legislation. The risk-based approach mandated for Financial Institutions (‘FIs’) and Designated Non-Financial Businesses and Professions (‘DNFBPs’) is a defining component of modern AML/CTF best practice. Other criteria, such as the keeping of data for financial surveillance reasons, have now established standards in many more advanced systems.

The provisions’ homologous recombination design is an unavoidable result of stricter compliance to the FATF’s 40 Guidelines. Nations all across the globe strive to match their structures as accurately as possible with the approved practices. Furthermore, rules such as those referring to the National Risk Assessment help key players preserve a wide understanding of any financial threats. It also helps in improving the administration of Qatar’s particular money laundering and terrorist funding threats.

Counter-Terrorism Financing and Sanctions

The new Qatar AML laws have managed to bring along several of the greatest important reforms. This is about the Counter-Terrorism Law (‘Counter-Terrorism Law’). It contributes significantly to Qatar’s increased attention on national and foreign terrorist concerns. Qatar has formed a new National Counter-Terrorism Committee underneath the new legislation. It entrusted with synchronizing the activities of all essential parties in charge of executing counter-terrorist defenses. The customer terrorist financing regarded as the new centralized strategy. It entails taking an active role in foreign delegations. It also entails developing and implementing a national plan. This is for the purpose of combatting terrorism as well as the sanctions. It also helps in improving public understanding of the threats associated with terrorism.

Risk-based approach

One of the most significant improvements ushered about by Qatar’s new AML laws for all financial companies and DNFBPs is the adoption of a risk-based approach. This helps in anti-money laundering and counter-terrorism funding issues, as well as the conduct of a risk analysis. The financial organization may use the risk-based approach.  It can be useful for DBFBP’s anti-money laundering/counter-terrorism funding duties, client due diligence, and reporting systems, among many other things. Therefore, the risk-based approach doesn’t really expressly extend to record-keeping. It therefore would not apply directly to monitoring questionable transactions.

Customer due diligence

In some cases, Article (10) of Law 20 mandates financial institutions and DNFBPs to do client due diligence. It also includes the establishment of a commercial partnership. Article (11) of Law 20 specifies the due diligence requirements:

• Recognizing the client and anybody operating on his or her behalf.
• Finding beneficial ownership.
• Getting knowledge and comprehending the essence of the professional connection and/or transaction.
• Obtaining knowledge and comprehending management and control arrangements in relation to corporation consumers.

Qatar Anti Money Laundering Risk assessment

The new Qatar AML framework mandates financial institutions and DNFBPs to conduct evaluations. It also directs them to design, monitor, and maintain risk management  institutional rules, protocols, and safeguards. Those which are proportionate to their risk profile.  Depending on the nation, consumer, and transaction vulnerabilities.  The period of records required to keep also extended to 10 years.  A five years commitment required previously. P The QFC AML/CFT Regulations updated to accommodate the extended time of record maintenance.

Introduction

Whether it’s anti-money laundering (AML) or counter-terrorist financing (CFT), there’s little doubt that regulation is becoming increasingly stringent, frequent, and costly to manage: Worldwide spending on AML compliance might exceed $15 billion by 2022. It also costs more not to comply, with higher fines and possibly terrible consequences for business reputations. This is mirrored in the worldwide survey results. Where the two most significant issues were highlighted as the rate of regulatory change and a shortage of competent personnel.

Challenge For the middle east

The Middle East area presents unique problems. With an extremely diverse spectrum of both multinational and local banks with a worldwide reach. There is also a significant degree of money service enterprises and cash transactions.  It also includes global trading centers. Hence, it includes geographical closeness to unstable or sanctioned places.

What’s striking is the stark disparity between global and Middle Eastern scores in these two important categories. We recognize the challenge in obtaining qualified resources in the region. This demonstrates the rising demand from financial institutions for proper employees.

Dubai Financial Services Authority (DFSA): Its Importance

Dubai is one of the most prominent financial centers in the UAE and the Middle East. In its special economic zone, the Dubai International Financial Centre (DIFC), supports a variety of international commercial interests. The DIFC, which was founded in 2004, is home to hundreds of banking and financial organizations. Since its establishment, it has developed to become one of the world’s top 10 financial hubs. Dubai’s profile makes it a desirable target for financial fraudsters. Therefore, they want to take advantage of the city-wealth state’s concentration to launder money or fund terrorist operations.

The DIFC has its regulatory structure in place to deal with the financial challenges it faces, and it is a distinct jurisdiction from the rest of the UAE. The Dubai Financial Services Authority (DFSA) has taken the charge of preventing money laundering and other financial crimes in the special economic zone, oversees this regime.

Anti-Money Laundering Laws in Dubai

Anti-money laundering law in Dubai is mostly based on UAE federal legislation. Which was created to comply with worldwide AML/CFT standards outlined in the Financial Action Task Force’s recommendations (FATF). The following are some of the most important federal laws that govern AML in Dubai:

1. Money Laundering and Terrorism Financing Crimes: Federal Law No. 4 of 2002.
2. Decree on Combating Terrorism Offenses (Federal Law No. 1 of 2004).
3. Anti-Money Laundering and Counter-Terrorism Financing and Combating Illegal Organizations Financing Federal Law No. 20 of 2018.

Since, the DIFC Regulatory Law of 2004 imposes unique AML/CFT restrictions on the special economic zone, which is under the authority of the DFSA, in addition to federal UAE-wide legislation. Article 7(1) of the Regulatory Legislation of 2004 mandates compliance with UAE federal law by DIFC businesses. Banks, financial institutions, and other obliged businesses applied for and got a license from the DFSA in order to operate in the DIFC.

Anti-Money Laundering Compliance in the DIFC

The DFSA requires enterprises in the DIFC to take a risk-based approach to money laundering in compliance with FATF principles. In reality, this means companies must create an AML/CFT program that is commensurate to the money laundering risks they face, and it must contain the following procedures and processes:

Customer due diligence:

Companies should implement suitable CDD methods to check their clients’ identities. They should guarantee that they are being truthful about the nature of their business. Hence, customers who pose a higher risk of money laundering should be subjected to increased due diligence (EDD).

Transaction monitoring:

Customer’s activities and accounts monitored for behaviour. It might suggest money laundering, such as transactions surpassing a specific threshold. Therefore, it can include unusual transaction patterns, or transactions involving high-risk nations.

Screening:

Customers screened for negative media coverage and status as politically exposed person. Also against appropriate international sanctions lists.

Compliance officer:

Internal anti-money laundering procedures should be monitored by a compliance officer, also known as a money laundering reporting officer (MLRO), who has adequate authority and experience to properly carry out their duties.

AML handbook:

Though, firms have special modules for the application of AML/CFT legislation. It’s inside the DIFC is issued an AML Rulebook by the DFSA. The handbook explains how to use the risk-based strategy. It also helps to interpret AML/CFT regulations. The DFSA AML rules should be familiar to all banks. Also, it should be familiar to financial institutions operating inside the DIFC.

UAE and Anti-Money Laundering

To prevent money laundering and terrorist funding, Saudi Arabia enhanced its regulatory and legal framework.

In recent years, the kingdom has been working hard to improve its legislative and regulatory structure. This helps to combat money laundering and terrorist financing. Hence, based on its belief in the importance of improving compliance with the international standards issued by the Financial Action Task Force for combating these crimes.

Countries all across the world are tightening legislation to combat money laundering. This helps in the prevention of terrorist financing. The UAE’s Ministry of Economy has established a new anti-money laundering unit. This helps to verify that all non-financial firms and professions follow local rules.

This is to “improve transparency in financial transactions” and increase monitoring of money transfers. The UAE’s Central Bank has ordered all hawala providers – informal funds transfer service providers for people using non-bank means – to register with the central bank.

Enforcement by the DFSA

When businesses in the DIFC fail to follow AML/CFT laws, the DFSA has the authority to investigate the violations. As part of the inquiry, the DFSA may seek a range of evidence. Therefore, this includes acquiring accounts and documents and conducting sworn interviews with workers.

The DFSA has the authority to apply penalties. It includes fines, license suspensions or revocations, or administrative restructuring. If enterprises judged have fallen short of required compliance requirement.Money laundering charges include penalties. Which ranges from 10,000 to one million dirhams, as well as jail terms of up to ten years.

Detection of AML/CFT activities

The importance that Middle Eastern organizations place on ‘Know Your Client’ measures is spot on. People need to understand who they are working with. Whether it’s a bank or another form of organization. With so much business being performed electronically, with individuals they will never meet, this has never been more vital than it is now. However, by conducting business in this manner, people are effectively placing their brand in their hands.