x Abu Dhabi, UAEMonday 22 January 2018

Financial crime in regional spotlight

In itss Global Anti-Money Laundering Survey 2014, KPMG says the UAE is making progress to tackle money laundering – but more needs to be done across the region to stop financial crimes.

The UAE is making progress to tackle money laundering but generally more needs to be done across the region to stop financial crimes, according to KPMG.

The professional services company’s Global Anti-Money Laundering Survey 2014, released last week, collated findings from 317 respondents from anti-money laundering professional backgrounds from across 48 countries. Globally, 88 per cent of participants said anti-money laundering had emerged as a key area of focus for senior management.

“As a rapidly developing region, the Middle East needs to take a more proactive approach towards reducing its vulnerability to financial crime and create infrastructure that will facilitate effective anti-money laundering enforcement. The Anti-Money Laundering Survey indicates that 92 per cent of respondents considered anti-money laundering a high-risk area,” says Kauzal Ali Rizvi, the director of consulting for KPMG Lower Gulf.

“Furthermore, the political and civil unrest in [parts of] the Middle East continues to pose a challenge for financial institutions’ sanctions screening in terms of responding to rapid changes to sanctions lists and their increased volumes.”

The report said the UAE was taking steps to crackdown on financial crime. Recently, the Federal National Council’s (FNC) Financial and Economic Affairs Committee announced changes in its money laundering rules. It also changed the name of a new draft law on the issue to Anti-Money Laundering and Combatting the Financing of Terrorism.

The first draft of the law had included four activities that were considered criminal offences – transferring, depositing, transmitting or replacing money with the purpose of hiding or disguising its illicit origin. The FNC added two more offences – saving, or investing in, illegal money.

While focus on stemming money laundering within the region has risen over the last three years, the survey found that challenges remain, particularly around compliance.

Customer due diligence, transaction monitoring and identification of politically exposed persons remained a challenge. At present, a major concern for the Middle East banks is a lack of data consistency.

Globally, the cost of anti-money laundering is rising at an average rate of 53 per cent for banks, the survey found.

Only 32 per cent of the 95 per cent of respondents who said they had a global policy to deal with the issue were able to maintain consistency in tackling money laundering across subsidiaries and branches.

Banks surveyed in Middle East and Africa indicated that the three main concerns on their anti-money laundering agenda were the lack of qualified resources (76.6 per cent), the pace and impact of regulatory change (72.3 per cent) and the lack of overall training (72.3 per cent).