Guernsey must do more to stop money laundering

A report on Guernsey's financial sector has called into question the effectiveness of the island's anti-money laundering provisions.

In what was otherwise positive feedback from a 2010 International Monetary Fund inspection, the report cited a "disconnect" between the number of money laundering cases investigated and the number of prosecutions and resulting convictions.

The report said: "The law enforcement authorities are adequately resourced and trained and have a sufficient legal arsenal at their disposal to effectively conduct a money laundering investigation, but still the results are modest.”

The IMF warned that that this approach could lead to Guernsey becoming over reliant on foreign enforcement bodies to investigate cases within its own borders.

The IMF also believed Guernsey could do more to identify what it called “high risk customers”, who should be subject to greater due diligence checks. Reliance on introducers such as UK lawyers and accountants to vet such customers was not enough, the report said.

According to the IMF, financial institutions should also be subject to potentially greater fines from the local regulator, the GFSC. The current top level cap of £200,000 was not “dissuasive or proportionate” in terms of financial companies breaking local rules.

Source: The Telegraph

IMF warns Kuwait on money laundering risk

Kuwait needs to tighten its anti-money laundering rules or risk its growing financial sector being exploited by criminals, the IMF has warned.

Smuggling to and from neighbouring Iraq, fraud and corruption are among the main money laundering crimes identified by authorities to date, the organisation, based in Washington, said in a report.

At present, there is no evidence of significant money laundering in the country, it said.

But the IMF said criminal risks increased as the financial sector expanded, fuelled by increasing oil revenue and higher government spending, and would increase further if plans to create an international financial centre were realised.

"These developments have the potential of creating a suitable environment for money launderers seeking to exploit the Kuwaiti financial sector to exercise their illegitimate activities," it said.

Kuwait trailed other GCC states in Transparency International's Corruption Perceptions Index last year, ranking 54th out of 180 countries. In 2003, it was 35th on the index.

The country has been battling against corruption in government and industry in recent years. Members of parliament last month discussed allegations that two MPs had received frequent cash payments into their bank accounts from unknown sources. Siemens uncovered evidence of corruption at its business in Kuwait, the German conglomerate said in June.

A major problem in Kuwait, the IMF noted, was insufficient anti-money laundering rules. A law introduced in 2002 did not criminalise the financing of terrorism and did not put in place a means of enforcing UN Security Council resolutions, it said.

A new draft anti-money laundering law has yet to be agreed on, despite being sent before the national assembly in 2007. In addition, preventative measures safeguarding financial firms from money laundering were not comprehensive, the IMF said.

Kuwait's finance sector, one of the pillars of the country's non-oil economy, is recovering from heavy losses linked to the global downturn. Gulf Bank required a government bailout and the investment industry underwent a hefty shake-up after several investment companies started to default on financial obligations.

tarnold@thenational.ae

Source: The National

Libya's Membership Application To MENAFATF Approved

Members of the anti-money laundering and anti-terrorist financing organization, the Middle East and North Africa Financial Action Task Force, or MENAFATF, approved Libya's membership application Tuesday, MENAFATF President Abdulrahim Al Awadi said.

"The plenary of 17 members approved the application of Libya to be a member and the application of the World Customs Organization to be an observer member," Al Awadi told reporters in Fujeirah, United Arab Emirates.

Libya will become the 18th member state of the organization, which was set up in November 2004 and includes Saudi Arabia, Bahrain, Oman, Sudan, Iraq and Egypt. The U.S., U.K., France and Spain are observer members, as well as the International Monetary Fund and the World Bank. The U.A.E. currently holds the presidency.

The U.A.E., which is keen to expand membership, also proposed that Djbouti, Comoros Islands, Seychelles and Maldives become members. The proposal is still being studied by member states.

Al Awadi added that the taskforce will meet next in Bahrain, which takes over the presidency of the organization in May 2009.

He also said that the global credit crisis won't draw attention away from fighting money laundering and terrorist financing.

"Members reiterate the financial crisis should not affect progress and, on the contrary, will add resolve to progress," Al Awadi said.

Source: Zawya

FATF Statement - 16 October 2008

IRAN
The FATF welcomes Iran’s recent engagement with the international community on anti-money laundering, notes the initial steps taken towards remedying the deficiencies in this area, and urges Iran to address the remaining weaknesses.

The FATF is particularly concerned that the lack of corresponding effort by Iran to address the risk of terrorist financing continues to pose a serious threat to the integrity of the international financial system. Urgent action to address this vulnerability is necessary.

The FATF calls on its members, and urges all jurisdictions, to strengthen preventive measures to protect their financial sectors from this risk.

The FATF is prepared to engage directly in assisting Iran in decisively addressing the weaknesses in its AML/CFT regime.

UZBEKISTAN
The FATF takes note of the action plan prepared by Uzbekistan to address deficiencies in its AML/CFT regime.

The FATF is increasingly concerned that the continuing failure by Uzbekistan to restore its AML/CFT regime poses a serious threat to the integrity of the international financial system. Urgent action to address this vulnerability and to meet international standards is necessary.

The FATF calls on its members, and urges all jurisdictions, to strengthen preventive measures to protect their financial sectors from this risk.

The FATF, along with the Eurasian Group, is prepared to engage directly in assisting Uzbekistan in developing a robust AML/CFT regime.

TURKMENISTAN
The FATF notes Turkmenistan’s efforts towards adopting AML legislation. However, financial institutions should be aware that the lack of an AML/CFT regime in Turkmenistan constitutes a money laundering/terrorist financing vulnerability in the international financial system. Turkmenistan is urged to continue its efforts to establish a comprehensive AML/CFT regime that meets international AML/CFT standards and to work closely with the Eurasian Group and the International Monetary Fund to achieve this.

PAKISTAN AND SAO TOME AND PRINCIPE
The FATF reaffirms its public statement of 28 February 2008 regarding the money laundering and financing of terrorism risks posed by Pakistan and Sao Tome and Principe.

AML/CFT IMPROVEMENTS IN THE NORTHERN PART OF CYPRUS
The FATF welcomes the significant progress made in the northern part of Cyprus and notes that the northern part of Cyprus has substantially addressed the AML/CFT deficiencies that the FATF had identified. FATF encourages the northern part of Cyprus to continue to improve its AML/CFT system. Implementation will be monitored through appropriate mechanisms.

Source: FATF Website