DUBAI, 15 June 2007 — Terry Douglas, a UK anti-money laundering (AML) expert now based at Dubai International Financial Center (DIFC), yesterday voiced his concerns over firms in the region operating without adequate protection against money laundering and stressed many may still not be meeting regulatory requirements.
“There is a danger that many employees in the financial sector have been merely following procedures and not really looking at the considerable risk of their firm being exploited by criminals. With the prospect of further recommendations from the UN’s Financial Action Task Force (FATF), the Dubai Financial Services Authority (DFSA), whose efforts to tackle this problem since 2002 have been admirable, will undoubtedly continue to pass new laws and regulations to combat what is a truly international problem,” he said.
“The Middle East still has a very cash-oriented business community, whereas this has largely been replaced by electronic transactions in other parts of the world. This has made it much more difficult to regulate money laundering here, as large amounts of cash are legitimately being transacted every day. This cash may well be dirty money, but the volumes of transactions can make it harder to identify criminal activity” said Douglas, who trains staff in anti-money laundering practices throughout the UAE.
“Where the DFSA regulator has not taken any high profile action against firms so far for failing to comply, it is early days. However, we expect the regulator here to take a comparable approach to the Financial Services Authority in the UK and there have been numerous damaging high-profile fines there.”
Douglas said the AML regulations now in place through the DFSA are not just about meeting requirements, but about remaining extra vigilant to help combat money laundering and terrorism.
The UAE minister of State for Finance and Industry Dr Mohamed Khalfan ibn Kharbash recently cited a study findings that $5 billion of laundered money resulted in gross domestic production (GDP) losses of between $5.63 billion and $11.26 billion.
The study also claimed this amount of laundering would result in the loss of 125,000 to 250,000 jobs in the national economy.
Money laundering is one of the biggest challenges facing the financial industry and the global economy at large, representing five percent of worldwide GDP, or more than $1 trillion annually, according to reports of the International Committee for Combating Money Laundering.