Banking Without Borders

To its credit, the UAE has co-operated with international AML/CFT investigations and initiatives, including co-hosting a joint workshop held in Dubai in May 2012 organized by the UAE Anti-Money Laundering/Suspicious Cases Unit (AML/SCU) and the UK Crown Prosecution Service (CPS), which focused in part on AML challenges and initiatives in the UAE. The previous month, the UAE co-hosted with the US embassy in the UAE an AML training session for Pakistani government officials, The Gulf Times reported. According to Dr Al Sumaiti, the director-general of the Dubai Judicial Institute (DJI) who spoke at the event: "The session acts as an interactive platform to look into local and international experiences and discuss the AML system application challenges. It investigates current developments in the field of anti-money laundering, with a focus on top international practices and standards to reduce such a menace that has made a negative impact on the global economy."

The March 2012 US Department of State International Narcotics report also acknowledged that the UAE government has taken some specific, albeit limited, steps to address the conditions that facilitate money laundering and terrorist financing activities. For instance, the Dubai Financial Services Authority (DFSA) released a lengthy commentary to DFSA-authorized firms and ancillary service providers on 20 June 2010 designed to ensure full compliance with UN sanctions introduced in mid-June to tighten restrictions on financial and shipping enterprises related to Iranian proliferation-sensitive activities.

DFSA outlined three specific actions to be taken by these firms in relation to correspondent bank accounts with Iran-domiciled banks, transactions with Iran-domiciled clients and wire transfers emanating from persons domiciled in Iran. These focused on: conducting risk assessments of direct correspondent relationships and customer due diligence with Iranian banks to ensure that Iranian banks have adequate internal controls to detect and prevent sanctions evasion; treating all transactions with clients domiciled in Iran as high-risk transactions, and obtaining sufficient information to avoid transactions that violate or evade sanctions, including identifying air/sea transportation companies used in transactions, specifically aimed at determining the direct or indirect use of Iran Shipping Lines (IRISL) vessels; and completing all information fields of payment instructions that relate to the originator and beneficiary of the transaction.

To date, the UAE has also signed memorandums of understanding (MoUs) with 40 countries, most recently in July 2012 with financial intelligence units in Kazakhstan and Ukraine during the 20th Egmont Group plenary session in St Petersburg, Russia, the Khaleej Times reported. These MoUs are designed to facilitate co-operation and information sharing between the UAE and others relating to money laundering and financing of terrorists. The previous month, on 21 June, the UAE National Anti-Money Laundering Committee (NAMLC) led by the director of the AML/SCU also discussed establishing a trilateral committee with the US and Russia on exchanging information on the suspected financial flows into their respective countries, according to a press lease issued by the Central Bank of the UAE.

Nevertheless, the UAE has yet to take meaningful action in curbing Iran's abuse of the emirate's financial sector, and continues to provide Iran with a critical gateway to access hard currency, goods and services and free use of many of its shipping ports. Indeed, several areas require further action by the UAE government in order to deter money laundering activity. "The government should increase the capacity and resources it devotes to investigation of ML/TF both federally at the AML/SCU and at emirate-level law enforcement. AML/SCU needs to improve its timely financial information sharing capability to conform to international standards. The AML/SCU also needs additional resources to be able to execute its mandate of hawala supervision – currently it is not capable of supervising the vast number of hawalas in the country or enforcing hawala compliance," the US government concluded in its March 2012 report.

Conclusion

Only two weeks after the 9/11 attacks, President George W Bush addressed the media and declared "war" on terrorism financing. "Money is the lifeblood of terrorist operations," he said. "Today, we are asking the world to stop payment." A few weeks later on 25 October, the administration launched an initiative referred to as Operation 'Green Quest', involving a special team of financial experts and law enforcement personnel to investigate how terrorists move money, the Associated Press reported. "The goal of [the operation] is to augment existing counter-terrorism efforts by bringing the full scope of the government's financial expertise to bear against systems, individuals and organizations that serve as sources of terrorist funding," said Deputy Treasury Secretary Ken Dam in a statement. "The same talent pool and expertise that brought down Al Capone will now be dedicated to investigating Osama bin Laden and his terrorist network."

Unfortunately, more than 10 years after these pronouncements, the war on terrorism financing and money laundering has stalled. This is clear even through the lens of the US government's own bottom-line metrics – assets seized and forfeited, successful investigations and prosecutions, and effective sanctions.

Although it is impossible to eradicate illicit finance and associated criminal activity completely, improving the ability of the law enforcement and intelligence communities to "follow the money" would be more important than any battlefield victory. Cutting off illicit finance deprives terrorist organizations of their means of survival. Without adequate finances, terrorist groups will struggle to sustain their operations. As such, while law enforcement, intelligence officers, and military personnel are sometimes intimidated by the scale and complexities of terrorism financing and international money laundering, the most important counter-measure available to them is initiative. On the trail of terror or in seemingly routine criminal inquiries, all investigators must take the next step and ask: what about the money?

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