Abu Dhabi: The Federal National Council on Wednesday passed a draft law to fight money laundering and terrorist financing.
The bill strengthens the integrity of the country’s financial strengths in line with the International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation — the FATF Recommendations, according to members of the House.
The FATF Standards were revised in 2012 to strengthen global safeguards and provide governments with stronger tools to take action against financial crime.
The draft law, fast-tracked by the government, sets up a national panel to be charged with fighting money laundering and terrorist financing. It will be made up of representatives from the UAE’s Central Bank, ministries of Interior, Foreign Affairs, Justice, Finance, Economy, and Social Affairs, as well as state security and customs authorities, among other institutions.
Under the new rules, money launderers may face up to ten years in prison, a fine of up to Dh500,000 or both. In the case of a business, the penalty is a fine ranging from between Dh300,000 and Dh1 million. Also, the proceeds of any money-laundering activity will be confiscated.
According to UN statistics, the amount of money being laundered globally in one year is nearly five per cent of global GDP, or $2 trillion (Dh7.34 trillion).
Board members, managers and staff of financial businesses who fail to report any money laundering transaction or terrorist financing carried out in their companies will face a jail term of up to three years, a fine of up to Dh300,000 or both.
Tipping money laundering suspects about any financial review or action taken by the authorities will be punishable with a jail term of up to a year, a fine of up to Dh100,000 or both.
Failure to declare any controlled substance or amounts to be determined by the authorities will be punishable with a jail term, a fine or both.
Cash or bearer negotiable instruments (such as cheques) worth Dh40,000 or more must be declared, under rules in effect in the UAE. New executive rules will be issued determining the amount of currency or instruments which must be declared under the new rules.
Protection to whistle-blowers
The new legislation provides protection to whistle-blowers who voluntarily report any money laundering or terrorist financing crime to the authorities, lead the police to other suspects and the money involved in the crime.
It also provides protection to witnesses who testify against suspected criminals in organised crimes that include terrorism, money laundering, trafficking in drugs and humans and fraud cases.
The draft law authorises the Federal Supreme Court — its verdicts may not be appealed — to look into terrorist financing crimes.
The bill, which requires final endorsement into a law by President His Highness Shaikh Khalifa Bin Zayed Al Nahyan, will be enforced with immediate effect from the date of being published in the official gazette.
The act of money-laundering was criminalised in 2002 pursuant to Federal Law no 4 regarding Criminalisation of Money Laundering, applicable to individuals and financial, trading and economic businesses operating in the UAE, including those located in the free zones.
The UAE Central Bank requires that banks and financial entities report any transactions carried out by customers, which they suspect may be related to illegal dealings, and may consequently be related to money laundering or financing of terrorism.
These banks and financial institutions are also required to verify the identity of their clients at all times, to maintain documents relating to the identities of customers for at least five years and to take note of any transaction which is not compatible with the income of its owner, and which does not seem to have any reasonable economic cause or clear legal objective. Such requirements also include monitoring all letters of credit which are opened.
The Central Bank has the power to impose sanctions, including the power to revoke an institution’s licence, should a financial institution fail to comply with the rules.
Obaid Humaid Al Tayer, Minister of State for Financial Affairs, responding to a query, said there was no delay regarding the law. “Developing anti-money laundering rules is an ongoing process, and those of you, members of the House, who attend regional and global anti-money meetings know this.”
Sultan Nasser Al Suwaidi, Governor of the UAE’s Central Bank, said: “Countries are given four years to introduce required anti-money laundering tools and the UAE’s deadline was 2012 or 2013, so there is no delay.”
