According to the IMF, “Money laundering is a process by which the illicit source of assets obtained or generated by criminal activity is concealed to obscure the link between the funds and the original criminal activity. Terrorist financing involves the raising and processing of assets to supply terrorists with resources to pursue their activities. While these two phenomena differ in many ways, they often exploit the same vulnerabilities in financial systems that allow for an inappropriate level of anonymity and non-transparency in the execution of financial transactions.” The UN Office on Drugs and Crime estimates the sum of money laundered globally is between €615 billion and €1.54 trillion each year. The Shoura Council announced in January 2015, that the number of money laundering cases in Saudi Arabia increased from 251 in 2013 to 265 last year. The Council of the European Union points out that, “Organized crime groups continue to use traditional methods of money laundering, such as shell companies and accounts in offshore jurisdictions. However, money launderers also increasingly make use of the internet and other technological innovations. Additionally, illicit financial services providers are emerging in the form of unsupervised payment platforms and banks.” With the terrorist attack in Qatif fresh in our minds, it is essential to note that Saudi Arabia has made a commitment to fight money laundering and terrorist financing. In May 2014, the IMF launched its second donor supported Topical Trust Fund (TTF) - to finance capacity development in anti-money laundering (AML) and combating the financing of terrorism (CFT). Over the five-year life of the fund, France, Japan, Luxembourg, the Netherlands, Norway, Qatar, Saudi Arabia, Switzerland and the United Kingdom have together pledged more than $20 million to support this TTF. As of March 2015, nine projects have already started utilizing TTF resources for direct assistance and technical training to combat money laundering and terrorist financing. But more needs to be done. Last week in Riyadh, Thomson Reuters and the Institute of Finance in Saudi Arabia held their 7th Compliance & Anti-Money Laundering Seminar. Key messages from the seminar included: • GCC compliance culture needs to be a corporate culture now; • MENA companies should perceive regulation as a driver for their business growth; • Compliance officers have to balance between handling regulation and managing commercial relations. Yaqoob Al Oraini, Chief Compliance Officer, Saudi Hollandi Bank, who took part in the seminar's fifth panel highlighting the key trends of global organized crime, said, “Know Your Client (KYC) continues to be an accurate way to identify transactions across MENA markets. This database is now the most vital element in the risk management world across the region. Our systems should be designed to report on high risk transactions.” Mohammed Al Aqeel, Head of Banking Processes, Saudi Arabian Monetary Agency added: “The interaction between government entities and financial institutions is a significant part in the compliance story. As part of its awareness plan, SAMA recently introduced new directives to the local banks in order to help them identify potential risks from a legal standpoint. The response from the local banks and financial institutions was very strong and promising.” A strong response in this regard is welcome, but it is not enough. Arz El Murr, Financial Sector Expert, IMF advised, “Financial institutions in the GCC need more guidance and an appropriate understanding on what is expected from them in order to feel comfortable. The financial system is changing and requirements of MENA consumers are significantly being impacted.”
