Articles

Anti-Money Laundering Laws Enhancements Across the Middle East

Compliance is not getting any easier and it will become even more complex now. A series of Financial Action Task Force peer reviews has resulted in increased regulatory scrutiny in various states across the Middle East and Africa regions and at the same time global regulatory activity, such as the European Union’s Fifth and Sixth Money Laundering Directive, has had a recent impact on compliance processes.

Here are some positive updates enhancement the Middle East:

Jordan

It is encouraging to see Jordan’s Lower of House on Monday embarked on deliberations over the draft anti-money laundering and counter-terrorism financing law, which proposes stricter penalties for such crimes.

The draft is part of Jordan’s international commitment to anti-money laundering and counter-terrorism financing and the non-proliferation of weapons of mass destruction pursuant to the findings of the Kingdom’s 2020 mutual evaluation process, the Jordan News Agency, Petra, reported.

The assessment, which was approved by the National Committee for Money Laundering and Terrorist Financing Risks, showed that the overall anti-money laundering risk in Jordan is “high”, while the counter-terrorism financing threat is “medium.”

The bill introduces detailed criminal penalties in the event that the reporting authorities do not comply with the provisions of the law. This is in addition to imposing a special penalty for violating the legislation related to the implementation of UN Security Council resolutions (UNSC).

Additionally, the draft introduces harsher punishment for legal persons and the confiscation of proceeds that convicted persons collect from the crimes they commit, according to Petra.

According to the draft, an attachment and confiscation office shall be established and be directly affiliated with the Attorney General according to a bylaw to be issued for this purpose.

Moreover, the bill expands the scope of those subject to the law, identifies supervisory and competent bodies in the anti-money laundering and counter-terrorism financing domain. It also expands the powers of the National Committee for Combating Money Laundering and Financing Terrorism and defines the functions and powers of the Financial Information Unit.

This is a step in the right direction and comfort can be taken from the fact that, in response to MPs’ queries as to  whether implementing UNSC resolutions are obligatory, the Prime Minister and Minister of Defence Bisher Al Khasawneh confirmed primacy of international conventions, including UN Charter, over domestic legislations except for the Constitution. 

Saudi Arabia

Authorities in Saudi Arabia last week approved a new law designed to combat financial fraud and breach of trust. The new legislation defines all aspects of financial crimes in detail and sets out the maximum penalties, while attempting to take into account the rapid pace of technological advances around the globe.

The Saudi Central Bank defines fraud as “any act involving deceit to obtain a direct or indirect financial benefit by the perpetrator or by others with his help, causing a loss to the deceived party.” Under the new law, the possible punishments for individuals convicted of committing financial crimes include up to seven years in prison and a maximum fine of SR5 million ($1.3 million).

Anyone who unlawfully appropriates money delivered to him through his work or by way of a trust, partnership, deposit or loan faces the possibility of a jail sentence of up to 5 years and a maximum fine of SR3 million.

The crime of incitement is also covered by the new law. Anyone who incites others to commit fraud or breach of trust, agrees to do so, or helps commit a crime that occurs as a result of incitement, will face a punishment that matches the limits for the type of crime. Individuals convicted of attempting to commit a financial crime will face punishment that does not exceed half of the maximum limit for the type of crime.

There are also special provisions for groups or gangs convicted of organized financial fraud. The penalties imposed against members of such gangs shall not be less than half of the legally determined maximum limit and will not exceed double this limit. The same penalty shall apply in the event that such crimes are repeated.

In addition, all tools and equipment used to commit a financial crime will be confiscated. Any sentence that is issued may also include the cost of publishing a summary of the judgment, at the expense of the convicted person, in one or more newspapers.

The updated law gives courts the discretion to grant exemption from the stated penalties to individuals who initiate efforts to inform authorities about crime that has not been detected, and before any losses result from it.

Impact of New Regulations

The move of regulators in MEA towards more stringent regulations will help the fight against financial crime and application of those laws by utilising robust mitigating tools will be beneficial for all companies in the financial services sector.

Contact Kharis & Knoble for your financial crime prevention solutions. Kharis & Knoble Risk and Compliance Consultants specialises in providing support for financial services companies and regulators in the UK, EU, Middle East and Africa to leverage an effective and sustainable AML, Fraud and Anti Bribery and Corruption environment as a competitive advantage and driver of business growth.

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