For as long as there has been money, there has been money laundering. In his 1995 book Lords of the Rim, US historian Sterling Seagrave traced its roots back 2,000 years to Chinese merchants who wanted to conceal their profits from local rulers.
Millennia later, the concealment of wealth gotten by illegal means remains a stubbornly persistent fact of life. Courtesy of rapidly improving digital technology, a continuing game of cat and mouse has emerged between financial criminals on one hand, and governments and law enforcement on the other. In the UAE, this contest has taken a new turn with the news that the government has amended its anti-money laundering legislation and established two new bodies to further tackle the problem.
State news agency Wam reported on Sunday that the UAE has set up a National Committee for Anti-Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organisations. An oversight committee will also be established to study “the effectiveness of strategies and measures implemented”, Wam said. The new bodies are a welcome step forward that embeds oversight into the fight against illegal money flows and demonstrates that the UAE is not content to rest on its laurels after being removed from Financial Action Task Force’s grey list in February.
At a time when cryptocurrencies and e-commerce have changed the game regarding illicit financial flows – even online gaming platforms and virtual currencies within games can be used to launder money or fund criminal activity – such a proactive approach is needed more than ever. This is particularly true when one considers that concealing wealth is not a victimless crime.
According to a report into anti-money laundering laws released by the International Comparative Legal Guides in June, money laundering “continues to sustain all types of crime from other types of drug trafficking and fraud, to public corruption, terrorism, human trafficking, illegal trafficking in wildlife and proliferation of weapons of mass destruction”.
However, the rise of increasingly sophisticated money laundering operations does not mean that more conventional forms of wealth concealment are not still at work. Last Thursday, a few days before the new anti-money laundering committees were announced, authorities in the UAE suspended 32 local gold refineries for three months after inspections by the Ministry of Economy uncovered 256 violations of anti-money laundering laws.
Indeed, gold remains a popular instrument for money laundering. On Friday, the Organised Crime and Corruption Reporting Project stated that the precious metal’s role as a hedge against inflation and liquidity on the open market make it “an attractive avenue for money-laundering activity,” adding that “criminals and the corrupt can buy and sell gold in order to move their ill-gotten gains out of one country and into another”.
The UAE’s geographical position and role as a long-time international crossroads, as well as its economic success, have made it a target for the unscrupulous. James Willn, partner for the energy and natural resources group at law firm Reed Smith, told The National that the country’s “phenomenal growth” had “unfortunately brought risk, especially with respect to money laundering”, as happens in major financial centres. The UAE is not unaware of these risks, and it has left no room for complacency. Because money laundering is often a transnational crime, it is a challenge that is best met by countries and international law enforcement working together. Co-operation is key.
Although money laundering is something that has always been with us, the kind of active measures being taken in the Emirates to curb it reveal the political will that exists to buttress investor and consumer confidence in the Middle East’s premier financial hub.
