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UAE touts money laundering “progress”

February 16, 2010

As Deputy Secretary of the U.S. Treasury Department Neal S. Wolin continues his tour and meetings in the United Arab Emirates today, the Central Bank of the UAE is trumpeting an increase of money laundering cases from 1200 in 2008 to 1700 in 2009.

Some people would be embarrassed that money laundering cases have increased, but not Abdulrahim Al Awadi, head of investigations at the UAE Central Bank.  He’s casting it as a healthy sign that UAE banks have increased their compliance with anti-money laundering standards and reporting.  From Emirates Business 24/7:

The UAE detected more than 1,700 suspected cases of money laundering in 2009, The sharp increase in cases against the previous year is due to stricter compliance by banks and other financial institutions, a Central Bank official said yesterday.

The Central Bank said it also received more than 11,800 reports on cash declaration last year as part of its intensified crackdown on illegal money, but denied recent reports that real estate firms were being used as channels for such funds.

The head of the Central Bank’s Anti-Money Laundering and Suspicious Cases Unit (AMLSCU) said the UAE was enforcing one of the strictest legislations in the world to fight money laundering, financing of terrorism and weapons of mass destruction, tax evasion and corruption.

“In 2009, the AMLSCU received 1,729 cases of suspected money laundering compared with 1,170 cases in 2008,” said Abdulrahim Al Awadi, Head of AMLSCU at the Central Bank.

“The reason for this increase is that the UAE economy is growing and the country is becoming more open to other economies and societies. But the more important reason is the intensive training courses we are conducting for bankers and staff at other financial institutions. Banking staff have become more experienced in detecting such cases and are showing stronger co-operation with the authorities and more compliance with existing laws. Another key factor is that we have introduced stiffer laws and new mechanisms to combat money laundering,” he said.

Speaking to reporters at a briefing to announce a regional anti-money laundering meeting in Abu Dhabi next week, Al Awadi said 683 suspected cases in 2009 were referred to the competent authorities for further interrogation, while 169 are now in court. The remaining cases are being investigated by the unit…

Al Awadi also flatly denied claims that UAE real estate markets are rife with laundered cash.  I hope that Deputy Secretary Wolin confronted UAE’s Central Bank governor with these concerns during their meeting yesterday.

8 comments

  1. Please don’t take offence at my response, but I see these comments as being indicative of many other unworthy bloggers in that when someone has a “down” on a particular country/region/city, if it is possible to take a negative slant on good news – then those people will!

    What the announcement is actually doing is emphasising the success of measures that have been implemented to identify, report, and prosecute incidents of ML/TF in the UAE.

    He is not reporting an increase in money laundering at all – I can find nothing in this or any other announcement to support that view. What he is saying is that the new measures have increased the likelihood of ML/TF in the UAE being discovered – hence good news!

    In the last few years and possibly driven by the Mutual Evaluation Report, in addition to local concerns and a wish to play an effective role in the prevention, detection, and prosecution of ML/TF, the CB UAE has increased pressure on local banks/financial institutions, who in turn have increased their spending on training and internal systems. We are now seeing the benefits arising from this investment. The UAE is now prosecuting more money laundering cases than ever before, is co-operating on AML/CTF globally, has fallen out with one of its major trading partners for deporting a large number of its citizens for “terrorist-related activities” (fundraising), and has a number of “terrorist-related” (fundraising) cases going through the courts. You may also recall that in August 2009 a Manhattan judge praised the UAE for its efforts, as have US spokesmen with regard to TF measures being taken in the UAE. The US is withdrawing its OFAC advisor, which can also be interpreted as a positive sign. The DFSA is widely recognised as a “first-division” regulator – unfortunately the new free-zones are someway short of that mark, and much work is needed to bring them into line. Separately, the UAE is now regarded as one of the Top-10 destinations for US visitors/tourists.

    That said, the UAE has a long way to go! Its’ primary legislation pre-dates the 2003 UN Model Legislation and the Revised FATF recommendations. It was also heavily (and rightly) criticised in the Mutual Evaluation Report, but has responded positively. CB UAE tasked an international firm of consultants to review its AML/CT regime and a report is imminent. I am anticipating major change/updates to legislation and regulation in the coming year. The UAE always meets its commitments to any MOU it signs, and is seeking to sign a further 92 in the coming months. Investigative units are under-resourced and overworked – again because of the increasing pressure applied to ML/TF activities. Hopefully this will be recognised by the Authorities and additional resources provided (I understand that the appointment of 8 additional resources has been approved). It is a cash-based economy; bringing in cash is not illegal; everyone here uses larger sums of money in cash than we would do in our home countries. Changing peoples’ mindsets will be a long and tough battle.

    Please take note of comments made by the Head of FATF – ML/TF are global problems! Everyone has issues and no-one is immune! Have a look at how many EU countries have yet to implement the Second Directive! What is the US doing about bringing lawyers etc. further into the regulated regime? Look at what the senate committee had to say about weakness in US systems.

    As I said, the UAE has some way to go but it is a willing worker that needs encouragement and not abuse, which in most cases is what it receives!


    • Thanks, David, for your expertise & for taking the time to comment publicly!

      What colored my reading of the Emirates Business 24/7 article was that, all too often, the financial authorities tell us that problems aren’t so bad as they seem. For example, U.S. Treasury official David Cohen has downplayed the financial resurgence of the Taliban. Another example is Pakistan, where the Ministry of Zakat and Ushr often tries to minimize the scandals plaguing their office.

      So I’ve developed a bit of skepticism for public statements that don’t seem to jibe with other reports. I’m even more skeptical if the statements are made during a politically sensitive time (as with the case of the UAE’s Central Bank’s report shortly before Sec. Clinton and Dep. Sec. Wolin visited the region, and before FATF was expected to issue its latest blacklist).

      What was also on my mind was stories about money that has been flowing from the Taliban to the UAE for several years, and including indications that Dubai is still overflowing with illicit cash.

      When it comes to detection, I am very heartened to hear from you that UAE banks are 1) spending more, 2) training more, and 3) being pressured more by the central bank. Good news indeed.

      To your point about increased prosecutions, that may be good news, but that generates the same question—are the numbers going up because crime is on the rise or because enforcement is getting better?

      I think the best thing to be said for the UAE is it managed to stay off of FATF’s new blacklist. Perhaps FATF was persuaded by the same signs of progress you described.

      As for these things being a global problem, I agree entirely. I’ve addressed serious issues outside the Middle East to include the Philippines, India, Italy, France, the U.K., and the U.S.

      You are right that it cannot be automatically assumed that an increase in money laundering cases is a bad thing. But neither can I accept that an increase is automatically a good thing. Ultimately, we will only be able to judge the trend, not just by the forthcoming consultants’ report you mentioned (though I’m sure that will be useful & hope you’ll buzz us when it’s released) but by UAE’s ML/TF results. To me, the salient results are whether more or fewer cases of terrorism are being funded by or funneled through the UAE.

      I have two questions for you if you don’t mind—1) when you say that the authorities will approve eight additional resources, what kind of resources do you mean? 2) Could you provide an example of country that isn’t doing as well as the UAE in the areas you cited? For example, a country that doesn’t seem to be investing in improved detection, prosecution, international cooperation, etc?


  2. Hi AD,

    As usual you put forward a good case!

    Answering your questions, I understand that the Dubai Police AML team has received funding for 8 more investigative resources – mind you, they are so busy they will probably wear those guys down very quickly!

    As for your second question, Qatar has some issues to deal with and Yemen is very much in the frontline. In addition, I am not long back from Pakistan where there are real difficulties to contend with.

    The Region generally is not as strong on AML/CTF as it could be, but you cannot separate economics and politics as effectively as elsewhere. In addition, the influx of expats from all over the world makes the Region a real meting-pot of races, nationalities, and creeds. In that sense the statement that “one man’s freedom fighter is another man’s terrorist” becomes more obvious than ever.


  3. If only I had a dime for every time I came here! Amazing article!


  4. Very awesome writing! Truely.


  5. PLEASE READ THE 2 BOOKS

    – UAE CENTRAL BANK & 9/11 FINANCING

    – TAKING PEOPLE FOR A RIDE : HSBC MIDDLE EAST THE DEVILS’S BANK.

    EXPOSING MONEY LAUNDERING AND TERROR FINANCING PICKED UP BY ME WHEN I WAS THE CHIEF EXAMINER AT UAE CENTRAL BANK

    BOTH THE GOVERNOR AND AMLU HEAD SHOULD BE IN JAILS FOR LIFE


  6. Wanted to drop a remark and let you know your Rss feed isnt functioning today. I tried including it to my Bing reader account but got absolutely nothing.


  7. […] have been a tactic used by terrorist groups and their financiers in both the UAE (see here and here) and Kenya.  Rediff points out that this isn’t the first time that terrorists in India have […]



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