There is a high magnitude of money laundering activities happening across the world. Since these are illegal activities and difficult to identify, there are no precise statistics or even estimates available that show the actual money that is being laundered every year.
Several international organizations and global and regional integrated committees and task forces work together to fight against money laundering. Some of the organizations include the Financial Action Task Force (FATF), International Monetary Fund (IMF), International Money Laundering Information Network (IMoLIN), Interpol, the World Bank, the United Nations Office on Drugs and Crime (UNODC), European Commission, Offshore Group of Banking Supervisors, and many other organizations and institutions.
FATF is a global supervisory body for money laundering and terrorist financing activities. It was established at the G7 Summit in Paris in 1989. Initially, it developed measures to fight only money laundering; in 2001, it expanded to include terrorist financing while in 2012, financing of proliferation of weapons of mass destruction was included.
FATF has developed a global network of Regional Bodies called FATF-Style Regional Bodies (FSRBs) to coordinate on policy-making and promote the adoption and implementation of the measures recommended by FATF. The global network of FSRBs includes:
- Asia/Pacific Group on Money Laundering (APG
- Caribbean Financial Action Task Force (CFATF)
- Eurasian Group (EAG)
- Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG)
- Groupe d’Action contre le blanchiment d’Argent en Afrique Centrale (GABAC)
- Financial Action Task Force of Latin America (GAFILAT)
- Inter-Governmental Action Group against Money Laundering in West Africa (GIABA)
- Middle East and North Africa Financial Action Task Force (MENAFATF)
- Committee of Experts on the Evaluation of Anti-Money Laundering Measures (MONEYVAL)
Objectives of FATF
The key objectives of FATF are:
- To set relevant standards for combating money laundering and terrorist financing
- To strategize, develop, and implement operational, legal, and regulatory policies and processes to fight money laundering and terrorist financing
- To review and monitor the implementation and compliance with its policies by its member countries
- To promote the adoption of AML compliance measures and recommendations across the globe
- To protect the banking system and the financial institutions from the threats of money laundering and terrorist financing
- To collaborate with other organizations and governments to develop tools that can fight money laundering, thereby protecting the integrity of the banking and financial system
Actions by UAE for prevention of money laundering
UAE is a major financial centre for the Middle East region and also a popular international centre. There are several national and international banks and financial institutions in the seven Emirates and more than 30 financial and commercial free zones of the country. Several economic activities are conducted in the mainland and free zones with different jurisdictional nature and disjointed supervision structure that increases the risks of money laundering and terrorist financing.
UAE is a member of MENAFATF. It complies with the 40 Recommendations of the FATF and has put in place anti-money laundering and counter-terrorist financing policies to strengthen its banking and financial system’s fight against money launderers. Some of the key actions taken by UAE to address the money laundering issues are:
NRA (National Risk Assessment)
UAE developed the National Risk Assessment (NRA) that is involved in enlisting the key threats that businesses face in terms of money laundering along with their impact. The relevant committee has worked out and released a national AML Strategy that gives a push to the country-level AMLCFT framework.
Financial intelligence network
The financial intelligence network of the country has a strong hold on information sources. Therefore, they engage in carrying out financial investigations through gathering information from various financial sources to identify fraud situations, money laundering cases, and terrorist financing activities.
Police have been very active in identifying the cases of money laundering under the prioritization of money laundering in the 2018 national policy. Authorities are keen on identifying the money laundering risks to individuals and businesses and therefore, push for further investigation, prosecution, conviction, and sanctions. The government is also involved in enhancing coordination between relevant authorities to hire skilful people, train their employees, and improve their awareness of anti-money laundering measures and policies.
The Insurance Authority in the mainland, the Dubai Financial Services Authority (DFSA), and the Abu Dhabi Financial Services Regulatory Authority (FSRA) have designed and developed a risk-based approach for the supervision of the money laundering and terrorist financing risks in their relevant areas of expertise. Consequently, the banking authorities, specifically the Central Bank, Securities and Commodities Authority (SCA), and the Banking Supervision Department (BSD) are currently in the process of conducting a deep understanding of the money laundering risks.
UAE has strengthened its AML/CFT framework by enacting an AML law in 2018 and an AML by-law in 2019. These are comprehensive regulations including many areas of money laundering. Some of the other new laws include the concerns of a risk-based approach, enhanced intra-agency coordination, beneficial ownership requirements, improvement in money laundering investigations, and international cooperation. The government has also been active in the formation of several committees that play a strong role in improving the coordination and cooperation of authorities on money laundering and terrorist financing issues and efforts.
The money laundering process occurs in three steps of placement, followed by layering, and finally, integration. In layman’s terms, the money launderer introduces illegal money into the financial system, then converts or moves the funds through multiple channels to go far off from the source, and finally, funds re-enter the economy in form of legal money.
Money laundering schemes generally occur across the border since it is a better way to hide the origins of the funds, thereby affecting multiple companies and multiple economies. Therefore, international cooperation is necessary to deal with money laundering cases.
We provide almost all types of AML compliance services; however, we have a discussion with you to understand your money laundering issue or risk management problem, and then suggest solutions accordingly.
UAE has been active in forming AML compliance laws nationally and will continue to cooperate internationally for better efforts and results. Organizations must make efforts from their side to maintain the integrity of their operations. For this, you can hire AML compliance consultants or consultancy firms to understand the risks of money laundering for your business and to deploy relevant AML framework to remain in the legal, professional, and ethical ambit of AML compliance.
Our strengths – AML Consulting Services
NR Doshi & Partners is the best AML consulting services provider in UAE with more than 35 years in this field. We ensure to help you in every aspect of your AML-specific requirements to improve your business efficiency, and hence, profitability. Our AML compliance consulting includes data capturing and verification, checking sources of finance, implementation of AML/CFT frameworks across your geographical presence, KYC standards, and risk management. Our expert AML consultants have the perfect solution for any of your AML compliance issues.