UAE Insurance Industry Moves On Money Laundering

by Lorys Charalambous, Tax-News.com, Cyprus

10 April 2002

The United Arab Emirates insurance industry is 'fast tracking' the implementation of legislative reforms and safeguards in order to prevent criminal or terrorist funds from being laundered through the sector, according to reports.

Speaking to the Gulf News service, unnamed senior industry officials confirmed that reforms currently being put in place include the establishment of dedicated units within companies to oversee anti-money laundering procedures, and the nomination of compliance officers. The latter is now required under new legislation enacted in the wake of the September 11 attacks.

'It was unfortunate that there was so much local ignorance about money laundering and how it can impact the insurance sector. The new laws have come as an eye opener to the sector here,' Abdul Muttalib Mohammed, the general manager of Oman Insurance Co explained to Gulf News.

He added that: 'In the past, Dubai's position as an open market could have allowed laundered money to pass through. But with the new laws and the attitude of the Central Bank, it will become increasingly difficult for such money to pass through.'

Directives from the UAE Central Bank have made it mandatory for all licensed financial institutions to report transactions of over Dh20,000. However, it is thought that general insurers in the region are less vulnerable to money laundering activity than life insurers, who sell investment related products.

Although the newspaper suggests that the sector was largely unprepared, and reveals that very few local insurance companies had, until recently, equipped their operations to tackle money laundering, there is widespread recognition of the seriousness of the situation, and of the need for urgent action.

'It is up to the individual insurance company to put up systems and procedures to ensure that they are compliant with the laws of the country and the Central Bank directives,' Mahmoud Nodjoumi, Managing Director of the UAE arm of Eagle Star, explained. 'Any failure on the part of the company, whether it be in detection or reporting, will have far-reaching consequences for it and could damage it permanently.'

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