In the past, the UAE has faced difficulties in detecting financial criminal activities, however this is about to transform in the coming months. The Financial and Economic Affairs Committee (FNC) recently announced that it will be making drastic changes to a key policy and is in the process of creating an anti-money laundering (AML) law that is still in the draft stage.
While guidelines for the new law have been brewing for some time, changes will be made to existing ones, based on a report by KPMG, entitled the Global Anti-Money Laundering Survey 2014. This comprehensive study highlights that the UAE is, in fact, highly susceptible to financial misconduct. However, the report also mentions that the nation is making huge strides in tackling the issue.
The survey states that, globally, banking institutions are paying more attention to the pressing matter, which is proven by the increasing costs undertaken by these institutions. It also reports that AML costs are rising at a rate of 54 per cent, which exceeded forecasts of approximately 15 per cent. Most of this is attributed to the ever-increasing investments in monitoring transactions made by customers.
In order to prevent money laundering, politically exposed persons (PEPs) have been under constant scrutiny due to the higher possibilities of their participation in financial crimes, such as bribery. Eighty two per cent of survey participants revealed that senior staff is involved in the sign-off of procedures with such individuals.
Another main concern that was revealed by the report is Know Your Customer (KYC), which is a process that institutions undertake in order to confirm that a company is not involved in any form of criminal activity, including bribery, identity theft, fraud and money laundering. Seventy per cent of survey respondents has experienced some form of regulation in this aspect.
However, the biggest AML concern noted in the report was the speed at which regulations were being adjusted and were causing difficulty in their daily operational functions.