ABU DHABI // Iran is failing to prevent money laundering and the financing of terrorist groups, according to an intergovernmental financial watchdog.
The Paris-based Financial Action Task Force (FATF), in a report released at a week-long anti-money laundering conference in the capital, also warned other countries to take steps to protect themselves against operations based in the Islamic republic.
Iran was singled out for special criticism as the group named 27 other countries it believes are failing to stem the tide of illegal cash moving around the globe.
The task force applauded Tehran's recent greater engagement with the issue, but said it "remains concerned" about the country's "failure to meaningfully address the ongoing and substantial deficiencies" in its anti-money laundering and terrorism financing practises.
"The FATF remains particularly concerned about Iran's failure to address the risk of terrorist financing and the serious threat this poses to the integrity of the international financial system," said the report, published on Thursday.
"The FATF urges Iran to immediately and meaningfully address its deficiencies, in particular by criminalising terrorist financing and effectively implementing suspicious transaction reporting requirements."
It also repeated its 2009 warning for financial institutions to give extra scrutiny to dealings with Iran.
The report was released at the close of the conference, which brought together more than 500 participants and financial watchdogs from 53 countries.
Also on Thursday, the International Monetary Fund reported that Tehran had asked for technical assistance in drafting laws to combat terrorism financing.
In an annual assessment of Iran's economy, the Washington-based global financial institution "noted progress in establishing a more comprehensive" framework in Iran for tackling terrorism financing and money laundering. It urged Iran to strengthen those efforts.
Chizu Nakajima, the director of the Centre for Financial Regulation and Crime at City University in London, said it was no surprise that Iran should appear on the list.
She said FATF had scored significant success in strengthening anti-money laundering legislation since it was launched in 1989.
"There is a practical impact for failing to go along with the FATF recommendations in that other countries could be more reluctant to do business with you," Ms Nakajima said.
"In this day and age, countries can't afford not to be part of the global financial system."
Angola, North Korea, Ecuador and Ethiopia were also singled out for strategic deficiencies, while Pakistan, Turkmenistan, and São Tomé and Príncipe were cited for not fully addressing strategic flaws in anti-money laundering laws. The UAE did not appear on the list.
In November 2008, the FATF criticised the UAE's lack of reporting of "suspicious transactions".
"This list is a welcome move by the FATF and will put significant pressure on the named countries to take money laundering seriously," said Anthea Lawson, a campaigner for Global Witness, a human rights group, which also monitors international trade.
"However, the rich countries at the heart of the FATF need to get their own house in order and ensure that they too are meeting its standards."
Robert Palmer, the director of Global Witness, added: "The United States has serious loopholes in its laws. Banks are not required to properly identify their customers. Every dollar has to go through New York, and yet its own laws are not up to track."
In 2002, the UAE passed federal anti-money laundering laws. Two years later, terrorism laws were adopted making it possible for judges to issue the death sentence for money-laundering.
Qatar, which also appeared on the FATF blacklist, signed a deal with the UAE on Thursday vowing to exchange more information regarding suspicious cases.
The other countries on the FATF list were: Antigua and Barbuda, Azerbaijan, Bolivia, Greece, Indonesia, Kenya, Morocco, Myanmar, Nepal, Nigeria, Paraguay, Sri Lanka, Sudan, Syria, Trinidad and Tobago, Thailand, Turkey, Ukraine and Yemen.
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Key facilities
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In Search of Mary Shelley: The Girl Who Wrote Frankenstein
By Fiona Sampson
Profile
COMPANY PROFILE
Name: Qyubic
Started: October 2023
Founder: Namrata Raina
Based: Dubai
Sector: E-commerce
Current number of staff: 10
Investment stage: Pre-seed
Initial investment: Undisclosed
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
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'Munich: The Edge of War'
Director: Christian Schwochow
Starring: George MacKay, Jannis Niewohner, Jeremy Irons
Rating: 3/5
ABU DHABI ORDER OF PLAY
Starting at 10am:
Daria Kasatkina v Qiang Wang
Veronika Kudermetova v Annet Kontaveit (10)
Maria Sakkari (9) v Anastasia Potapova
Anastasia Pavlyuchenkova v Ons Jabeur (15)
Donna Vekic (16) v Bernarda Pera
Ekaterina Alexandrova v Zarina Diyas