There has been growing interest in combating money laundering by Arab countries lately, manifested in the adoption of new legislation, and specialized courts. Several Arab countries have established national committees to oversee a national strategy to combat money laundering and terrorist financing in order to accelerate the pace of decision-making on money laundering-related issues, as well as meeting the requirements of technical compliance with international standards. These efforts have a variety of aims; in addition to strengthening the national economy, governments also have security related objectives, such as cutting off financing of terrorist operations, and political objectives, such as diminishing the influence of overthrown regimes, by cutting off their networks. These measures also help confront efforts by external actors to meddle in domestic affairs through proxies. Arab efforts in this respect have taken many forms, examples of which can be described as follows:
Strengthening national economies:
Several Arab countries have lately adopted measures to prevent the flow of foreign currency out of the country, as well as to combat the use of their banking institutions for money laundering, as both have negative consequences for the strength of their economies and their international standing.
Among the most prominent measures recently taken in this respect is the establishment of specialized courts, such as those established by the Dubai Court on August 22, in both the Criminal Court of First Instance and the Court of Appeal. This was preceded by a Cabinet decree in December 2020 to establish The Executive Office for Combating Money Laundering and Terrorism Financing, enabling the Cabinet to tackle such crimes in coordination with corresponding regional and international entities. This comes especially given the UAE is one of the largest hubs of trading in precious metals in the world, which necessitates the monitoring of suspicious banking transactions, a unified electronic platform for customs, and the development of a program to regulate the movement of funds and minerals.
Chocking off funding for terrorist operations:
The armed conflicts within several Arab countries, such as Syria and Iraq, have imposed challenges on neighboring countries to prevent the flow of funds to finance these conflicts. This is especially difficult because extended families are spread throughout several Arab countries, and these family networks are often exploited to transfer suspect funds. Jordan, which is close to Syria and Iraq, has faced particular challenges in this respect, as some groups have used its territories as a base from which to engage in drug and arms trafficking, money laundering, and financing terrorist organizations.
Accordingly, on August 23, the Jordanian House of Representatives approved the draft law on combating money laundering and terrorist financing. The draft law aims to expand the scope of the categories covered by the provisions of the law, identify the relevant supervisory and regulatory authorities, expand the powers of the National Committee for Combating Money Laundering and Terrorist Financing, and define the tasks and powers of the Financial Information Unit. The law also grants the public prosecutor the power to seize the mediums and tools used or intended to be used in money laundering crimes, associated predicate crimes, or terrorism financing crimes, and obligate all competent authorities to provide the public prosecutor with the records, information, and data he requests within the period specified for this. The law was ratified after extensive consultations with officials within the state and current and former directors of the Jordanian Central Bank.
Dismantling the networks of previous political regimes:
Sudan provides a prime example of regulating financial flows as a means of undermining corrupt networks of an overthrown regime. Sudan has established a committee tasked with dismantling and disempowering the fallen regime of Omar al-Bashir on the economic front. On August 23, the committee announced the seizure of a number of bank accounts trading in huge sums of money in Sudanese pound, estimated at between 64 billion and 305 million Sudanese pounds, although account holders have been identified as young men and housewives with no clear source of income. The accounts have been implicated in brokerage activities. currency trading in parallel markets, money laundering, and foreign currency smuggling, which weakens the economy and undermine efforts at political transition. It should be noted that most of the suspicious accounts belong to members of the former regime and their children and relatives, which suggests legal action must be taken to recover what appear to be embezzled funds.
Accelerating the pace of decision making on money laundering issues:
On August 23, the Moroccan Governing Council approved a draft decree submitted by the Minister of Justice Mohamed Ben Abdelkader outlining the influence of competent courts in money laundering crimes, within the framework of the requirements of Article 38 of the law. This article provides for the generalization of jurisdiction in money laundering crimes to the courts of Casablanca, Fez, and Marrakesh, in addition to the Rabat court. This is intended to relieve pressure on the Rabat court. This decree also aims to achieve judicial efficiency in dealing with cases related to money laundering and strengthen mechanisms for research and investigation in this type of crime by creating four regional teams for the judicial police specialized in financial and economic crimes.
Pooling Arab experiences:
Sudan for example has sought to benefit from the Saudi experience in combatting the financing of terrorist networks through its religious endowments sector, as well as in combating money laundering. Joint workshops between the two countries were held in July, with the participation of representatives from the Ministries of Justice and Endowments, to help the new regime in Khartoum meet the challenges of the transitional period.
Countering efforts to bypass sanctions:
Countries in the region that are subject to sanctions often exploit elements within neighboring countries to help them bypass these financial restrictions. A recent case in point, revealed in November 2020, involved Iranian banks, including the Central Bank of Iran and the Future Bank in Bahrain. As a result, Manama took measures to scrutinize transfers made through its banking system by Iranian entities accused of financing terrorism and attempting to circumvent US sanctions. These developments were related to the policy of “maximum pressure” on Tehran adopted by the Trump administration.
Compliance with international standards:
Growing Arab interest in anti-money laundering legislation is related to compliance with international requirements. For example, Morocco’s new anti-money laundering legislation provided for the creation of a national legal mechanism in order to implement the requirements of Security Council resolutions related to terrorism, its financing, and the proliferation of arms. The mechanism is tasked with the imposition of financial penalties by freezing the assets of persons or entities that appear on lists annexed to Security Council resolutions. This is due to the fact that the International Financial Action Task Force (FATF) placed Morocco under surveillance on February 26th, 2021, for its negligence in combating money laundering and terrorist financing.
Sudan’s National Committee for Combating Money Laundering and Terrorism Financing also reviewed, on August 24, international requirements for combating such crimes, especially the supervision and inspection processes and the imposition of administrative sanctions on financial institutions that do not adhere to the relevant controls. Iraq has also been making similar efforts in order to be removed from the EU list of high-risk countries for money laundering.
The efforts of Arab countries to strengthen supervision of their financial institutions are likely to continue and intensify in the near future, especially in view of the link between money laundering and activities related to cross-border terrorism, illegal trafficking in drugs, weapons and people, all of which undermine both the economies and national securities of countries in the Arab region.