Dubai: Dubai's financial services authority will remain on guard against money laundering because such safeguards are needed to attract foreign capital, its chief executive said on Wednesday, and indicated a merger between the Dubai and Abu Dhabi stock exchanges could be an "important" development in the Middle East financial system.

"We will continue with our anti-money laundering efforts, systems and controls," Paul Koster told Dow Jones Newswires yesterday on the sidelines of a banking conference. "We are serious."

His comments follow May's Dh1.1 million fine which the regulator slapped on the local branch of an online broker for breaching its anti-money laundering systems and controls.

Commenting on the likelihood of a merger between the two stock exchanges, Koster said: "That is a political issue. But I would say consolidation is very important.

Talks of a possible merger have been on for a while as exchange operators globally are seen seeking new synergies and moving toward consolidation.

Earlier this year, Germany's Deutsche Borse AG and NYSE Euronext announced a takeover pact, while London Stock Exchange Group and Toronto's TMX Group said they have reached a deal to merge operations.

Russia's top exchanges, Micex Group and RTS, had announced their plan to merge, and in October last year, Singapore Exchange announced an $8.3 billion (Dh30.48 billion) offer for all the shares of ASX, the operator of the Australian Securities Exchange.