Interpreting Central Bank Law: Addressing Mandated AML Training for Banks in the UAE
Money laundering is a major problem for financial institutions around the world. Despite efforts at deterrence, cases of money laundering continue to climb, causing great risk to banks and their customers. The Central Bank of the UAE (CBUAE) has implemented laws to prevent money laundering activities and terrorist financing, such as the Federal Law on Combating Terrorism Offenses and the Federal Law Regarding Criminalization of Money Laundering.
In response to the rising amount of money laundering cases in the Middle East, UAE banks have begun to reevaluate their AML policies and procedures to ensure that they are compliant with the laws and regulations of the CBUAE. According to Article 17 of CBUAE Circular No. 24/2000 [1], the bank’s Compliance Officer is responsible for providing AML training to all staff members who are responsible for handling cash or overseeing accounts. But while regulatory documents and laws may insist that the training is necessary or designate responsibility to a bank’s compliance official, it often does not contain instructions for what the training should cover or how to implement it.
UAE banks can best protect themselves and their customers from the potential risk of money laundering by becoming familiar with CBUAE legislation, recognizing the signs of money laundering in the UAE and implementing a certified AML training program.
UAE AML Laws
The UAE and the CBUAE have issued and implemented laws in order to control the threat posed by money laundering and terrorist financing. The following laws each address a different area of AML and protect the UAE from the risk of money laundering and terrorist financing.
- The Federal Law Concerning Promulgating Penal Code – summarizes a penalty for any perpetrator who is not aware the property that they have obtained originated from unlawful or criminal means.
- Federal Law Regarding Criminalization of Money Laundering – gives further definition to the crime of money laundering and provides the means to freeze criminal assets, such as bank accounts, that are related to money laundering.
- Federal Law on Combating Terrorism Offenses – defines elements and actions of terrorism offenses and penalties for violations. The Law also allows all proceeds that have resulted in a criminal offense to be confiscated. Money Laundering in the UAE
The UAE’s position as a major financial hub in the Middle East, causes extreme vulnerability to UAE financial institutions of money laundering crimes. In 2009 alone, the UAE experienced a staggering 1,729 cases of money laundering.[2]
Aside from the rise of money laundering cases, four businessmen were accused of perpetrating the largest-ever money laundering scam in Dubai. The men were accused of laundering $150 million over a three-year period beginning in 2006 [3]. Although the businessmen were proven innocent of the crime, each defendant was sentenced to serve two months in prison for forging and using unofficial documents [4].
While the case against the businessmen has since been resolved, the UAE still carries the weight of hosting such a heavy money laundering scam. In order to prevent terrorist financing and money laundering, UAE banks must take measures to identify and analyze risk and to issue warnings about customers who are engaged in or may be engaged in AML scams and activities.
As the industry evolves, UAE banks should implement an AML training system to help employees understand and identify and mitigate the numerous risks. It is important, therefore, for banks in the UAE to use a variety of risk management practices and tools.
Training programs that focus on these important AML laws help educate staff on the dangers and risks of money laundering, not just to their bank, but to the UAE as a nation.
Dr. Linda Eagle is Founder & President of The Edcomm Group Banker's Academy; a 23-year-old education and consulting firm dedicated to serving Banks, Credit Unions, Money Services Businesses (MSBs) and all areas of the Global Financial Community with thousands of off-the-shelf and customized training programs in areas such as BSA/AML, Regulatory Compliance, Teller Training, Systems Training, Sales and Service Training, and many more. Visit www.bankersacademy.com for information on teller training for individuals.
The Edcomm Group Banker's Academy is headquartered in New York, NY. For more information, email linda.eagle@edcomm.com or call +1.212.631.9400.
References:
[1] The Central Bank of the UAE (CBUAE), “Circular No. 24/2000, Article 17,” November 14, 2000.
[2] Elisa Baxter. “Money Laundering Cases Rise in 2009, [http://www.arabianbusiness.com/581197-money-laundering-cases-rise-in-2009], February 2010.
[3] Bassam Za’za “Verdict Passed in Historic Money Laundering Case in Dubai,” http://gulfnews.com/news/gulf/uae/crime/verdict-passed-in-historic-money-laundering-case-in-dubai-1.599903, March 2010.
[4] Bassam Za’za. “Verdict Passed in Historic Money Laundering Case in Dubai,” March 2010.
Topics: UAE
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Member Comments
Anonymous, 11 May 2010 19:55
The FATF IMF and World Bank expectation for AML regime that is based on the "international standards" is applied discriminately - in accordance with irrelevant interests and political considerations - thus is the case in the Dubai most notorious ML case: "For years, Dubai prosecutors worked on delaying the litigation process in this case, before it was eventually referred to court under our persistence. The Public Prosecution-assigned committee failed to bring in any concrete evidence that the suspects laundered the £150 million," argued Bin Haidar.
The international standards for AML regime have a unique criminalization criterion - What smells and looks like X is X - IT IS THE DEFENDEDS' duty in AML case to prove that despite the AML typologies of theier trnsactions - the source of the monies is legitimate ... the fact that they have not been acquited of forgery and that no doubt if the prosecution would have provided evidence obtained from UK through legal assitance procedure - the source of the money could be established [but not essential for finding the accused guilty].
Training of the accountable bank personnel is essential but ... close review of the Gulf states AML ATF regime is more essential - the FATF and IMF should not accomodate "look alike" AML regimes for many years - just because theres is big money in a certain country.
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