Monday, April 7, 2014

UAE money launderers face 10 years jail and Dh500,000 fine

Abu Dhabi: New rules to strengthen the fight against money laundering are being discussed by the Federal National Council’s financial committee, said Ali Eisa Al Nuaimi, a member from Ajman on Sunday.

Al Nuaimi, also a rapporteur of the panel, told Gulf News, the rules are meant to further protect the integrity of the UAE’s financial system in keeping with the International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation — the FATF Recommendations.

The FATF Standards were revised in 2012 to strengthen global safeguards and provide governments with stronger tools to take action against financial crime.

“Protection will be provided to witnesses who testify against suspected criminals in organized gang crimes that include terrorism, money laundering, trafficking in drugs and humans and the big fraud cases,” Al Nuaimi said.
Under the new rules, anyone contravening the law may face up to ten years in prison, a fine of up to Dh500,000 or both. In the case of a business, the penalty is a fine ranging between Dh300,000 and Dh1 million. Also, the proceeds of any money-laundering activity are confiscated.

Board members, managers and staff of financial businesses who fail to report any money laundering transaction or terrorist financing will face a jail term of up to three years, a fine of up to Dh300,000 or both.

Tipping money laundering suspects about any financial review or action taken by the authorities will be punished with a jail term of up to a year, a fine of up to Dh100,000 or both.

Failure to declare any controlled substance or amounts to be determined by the authorities will be punished with a jail term, a fine or both.

Al Nuaimi said the law will be enforced with immediate effect from the date of being published in the official gazette.
The act of money-laundering was criminalised in 2002 pursuant to Federal Law no 4 regarding Criminalisation of Money Laundering, applicable to individuals and financial, trading and economic businesses operating in the UAE, including those located in the free zones.
Huge tax losses
With an estimated turnover of €600 billion (Dh3,020 billion) per year, money laundering causes huge tax losses in EU countries.

The Central Bank requires that banks and financial entities report any transactions carried out by customers, which they suspect may be related to illegal dealings, and may consequently be related to money laundering or financing of terrorism.

These banks and financial institutions are also required to verify the identity of their clients at all times, to maintain documents relating to the identities of customers for at least five years and to take note of any transaction which is not compatible with the income of its owner, and which does not seem to have any reasonable economic cause or clear legal objective. Such requirements also include monitoring all letters of credit which are opened.

The Central Bank has the power to impose sanctions, including the power to revoke an institution’s license, should a financial institution fail to comply with the rules.

There have been a number of multilateral meetings between UAE representatives and their counterparts in other countries to discuss means by which to collectively combat money laundering. For instance, UAE representatives met with their counterparts from the United States, Russia and Japan, among others, at the 3rd plenary meeting of the Financial Action Task Force in June 2012 to discuss exchanging information on the suspected financial flows into each other’s countries.