UAE Under Scrutiny Over Money Laundering

by Lorys Charalambous, Tax-News.com, Cyprus

12 November 2001

Following the introduction of a new rule obliging banks and financial institutions to register the details of any customer seeking to transfer more than Dhs2000 ($545), in an attempt to restrict money laundering carried out under the anonymous hawala system, the authorities in the United Arab Emirates have announced that they have closed a money exchange house over lapses in remittance processing, and are currently investigating nine other institutions.

The region has been under scrutiny over its anti-money laundering legislation (or lack of) for some time, and in 1999, US officials described enforcement of regulations against money laundering as 'basically nil'. However, in the wake of the September 11th terrorist activities, the UAE authorities were spurred into action, and several new regulatory measures and laws have been hurried in over the past couple of months.

Following the issuance of the first list of suspected terrorist individuals and organisations, the UAE Central Bank leapt into action, and 26 accounts were frozen in the jurisdiction. Although the White House has since issued a second list, the authorities in the UAE have not yet acted upon it. However, the Central Bank governor, Sultan Nasser al-Suweidi has said that this is because the information contained in the second list is too vague for regulators to pursue as yet, not because the jurisdiction's commitment to the fight against terrorist financing and money laundering is wavering.

Indeed, the United Arab Emirates are keen to show the international community that they are serious about the region's role in the ongoing struggle. In late October, the Dubai Islamic bank, which had previously been criticised by the United States for acting as a conduit for finance found to have connections with Osama bin Laden, declared that it had not had dealings with any of those named on the first US hit list.

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