Gulf region labelled as target for money laundering

The 2014 Basel AML Index Report revealed two ME countries as the targets for money laundering in their top 10 highest risk countries. Iran ranked 1 on the list while Iraq was placed at the 6th position. Both countries are known to have an insufficient Anti Money Laundering (AML) or Counter Terrorist Financing (CTF) framework in place

According to BAE Systems Applied Intelligence, the last few years have seen an increase in suspicious transaction reporting by the AML enforcement bodies of several countries including the UAE. Many financial experts agree that the Gulf region countries are a target for organised crime which gives birth to money laundering

One of the recent incidents reported took place in December 2013 in Bahrain and involved $105.6 million. The team involved were 12 insiders, including six branch managers, at a big money exchange house. All 12 employees, including 3 others, were found guilty. The money was brought to the exchange house in bags and transferred out of Bahrain into different parts of UAE. Fake companies as well as legitimate companies were used to send out the money. The legitimate countries were not aware of the happenings. The source of the illegal money has not yet been identified. The Central Bank of Bahrain intimated the Anti-Corruption and Economic and Electronic Security Directorate about the irregularities. The investigations spanned across Bahrain and included other regional UAE countries.

For the financial markets in the Middle East to attract foreign investment, the AML/CFT laws need to be tightened and made transparent. The US is also putting pressure on the regulatory authorities and banks to ensure no Iranian capital is harboured.