Article, Criteria for the Evaluation of the AML Compliance Regimes in Dubai and the Middle East

International Compliance

 

Module 9: Criteria for the Evaluation of the AML/Compliance Regimes in Dubai and the Middle East

 

By: Benjamin M Musau

 

LL.M Student, International Taxation and Financial Services

 

Thomas Jefferson School of Law

 

San Diego, CA

 

Module 9: Criteria for the Evaluation of the AML/Compliance Regimes in Dubai and the Middle East
 
Assignment: You have been hired as the Director in the Dubai Financial Services Authority Supervision Department. You are responsible for its Anti-Money Laundering function as well as chief officer for the regulatory supervision of licensed firms. The DFSA is the independent regulator of all financial and ancillary services undertaken in or from the Dubai International Financial Center (DIFC), and is responsible for ensuring that the DIFC is one of the best regulated financial centers in the world.
Dubai International Conference on AML/Compliance Regimes in Dubai and the Middle East
Who should attend:

• Dubai Financial Services Authority (DFSA) staff
• Government leaders
• Bankers
• Legal counsel
• Accountants
• Wealth advisors
• Business leaders
• Members of the public

Conference Theme: Compliance against money laundering, the financing of terrorism and financial crimes in general.
Navigating the intricacies of AML/CTF compliance and global AML regulations is one of the challenges that compliance officials face.  In this globally focused track, AML executives from financial institutions and government agencies show how to implement a truly enterprise-wide compliance program that mitigations exposure to risk across jurisdictions.  These discussions will help better assessment of institutional AML compliance program and ensure it meets the most stringent regulatory expectations.
Day 1: Monday morning session: Introduction to AML/CTF Compliance, challenges of Islamic banking and Hawala in Dubai
Navigating the AML/CTF compliance in Dubai and the Middle East would be a daunting task for participants without an overview of the history of AML/CTF regulation in the region and assessment of the current positioning of Dubai and the region in the context of international AML/CTF compliance standards.
Many financial institutions in Dubai and the Middle East (both large and small) are re-thinking their broad strategies for compliance programs as a means to streamline other organizational functions.  Using data collected for anti-money laundering purposes, for example, can be helpful to other departments.  In this morning session, experts will provide an overview of the history of AML/CTF regulation in Dubai and the Middle East, where we are today and where we need to go taking into account national, regional and international standards.

• History of AML/CTF regulation in Dubai and the Middle East
• Current and contemporary developments in AML/CTF regulation
• Comparison and contrast of local AML/CTF regulation in Dubai with regional and international standards
• Challenges of Islamic Banking and Hawala in the context of AML/CTF regulation.

Day 1: Monday afternoon session: Aligning Dubai’s AML Operation with the Dubai International Financial Center (DIFC): Creating Enterprise-Wide Value
One strategic partnership is the AML operation and the DIFC because both units provide valuable assistance to law enforcement and regulators while keeping the institution from harm’s way. It will involve an overview of AML/CTF compliance in Dubai and the Middle East, functions that DIFC can provide, how to align DIFC with the various businesses in the enterprise and offer a detailed roadmap to organize and staff the DIFC.

• Exploring the benefits and functions DIFC brings to an institution
• Reviewing a detailed road map to organize and staff the DIFC in both small and large institutions
• Understanding the strategies and procedures to align DIFC with other businesses units

Day 2: Tuesday morning session: Operation of the Kleptocracy Asset Recovery Initiative in Dubai
The World Bank estimates that as much as one trillion in bribes and corrupt practices is spent each year.  To end safe havens for this money and the people who pay or take bribes, the U.S. Department of Justice launched Kleptocracy Asset Recovery Initiative in July 2010.  Aimed at combating large-scale foreign official corruption and recovering stolen funds and the proceeds of corruption, the Justice Department initiative echoes efforts by the World Bank, the UNODC Stolen Asset Recovery Initiative and the thrust of the U.K. Bribery Act of 2010.  This intensive discussion outlines those international efforts to identify, trace and recover the proceeds of corruption and details how those efforts may radically change how Dubai institutions conduct business.

• Understanding how kleptocracies operate and which countries will be targeted in the initiative
• Analyzing the outcome of recent cases brought against sitting officials
• Evaluating the impact of this pandemic on correspondent banking relationships and the securities sector.

Day 2: Tuesday afternoon session: Fine-Tuning AML Transaction Monitoring: Alternative Monitoring Strategies in Dubai
As regulatory expectations for transaction monitoring continue to increase, firms are expected to develop and maintain more sophisticated systems tailored to their products and customer base.  In this interactive panel, expert presenters outline the latest techniques being employed to increase the effectiveness and efficiency of existing monitoring systems.  Panelists will also discuss new strategies for creating monitoring programs that react quickly to emerging risks while providing continued coverage of the basic elements of suspicious activity.  Attendees will learn about the drivers behind new monitoring strategies and how they translate into more efficient processes.

• Identifying the skill set required for effective management of monitoring systems
• Adopting a typology driven approach to augment your existing system
• Translating significant investigations into sustainable monitoring rules.

Day 3: Wednesday morning session: Designing a Comprehensive Compliance Program to Oversee Bribery and Corruption, AML/CTF and Sanctions in Dubai
Bribery and corruption have become a huge priority for law enforcement and regulators – and a source of enormous potential liability for both U.S. and foreign-based financial institutions.  Along with global sanctions, money laundering and terrorist financing, FCPA and the U.K. Anti-Bribery Law arguably pose the most significant risk to the future of your financial institution.  Hear panelists discuss recent enforcement initiatives and how your existing AML/CTF and sanctions infrastructure can be leveraged to create an all-inclusive compliance regime.  The discussion also elucidates your obligations regarding the UK Anti-Bribery law, OECD initiatives, PEP screening and addresses foreign corruption as predicates for money laundering.

• Adopting lessons learned from recent FCPA enforcement actions
• Determining your obligations under the UK Bribery Act and recent OECD initiatives
• Leveraging PEP screening to detect and prevent the proceeds of foreign corruption from entering your institution.

Day 3: Wednesday afternoon session: Perennial Issues: the Impact of Risk Rating on Your Compliance Program in Dubai
Since 2008, federal regulators have taken compliance professionals to task for how they differentiate their low-, moderate- and high-risk clients even though there is no clear definition of these categories.  And, the heightened attention on risk ranking has also brought additional pressure on compliance staffers to recast certain clients as high-risk and left them uncertain about how to identify moderate- versus high-risk accounts.
Do you understand all of the implications of customer risk-ranking on your institution’s compliance responsibilities?  What is a reasonable timeframe in which to update the settings of your automated transaction monitoring systems?  Why are regulators, taking a tough stance?  What can your institution do to respond?  How can Dubai and the Middle East learn from these perennial issues?

• Understanding risk ranking and the key attributes for defining low-, moderate-, and high-risk customers
• Effectively updating your transaction monitoring system to accommodate new definitions of risk
• Creating a solid strategy to develop and justify subjective ranking criteria.

Day 4: Thursday morning session: Perennial Issues: Leveraging Best Practices in CDD and EDD to Accurately Identify Beneficial Ownership in Dubai
International sanctions, corruption, fraud, FCPA and counter-terrorism initiatives require greater emphasis on Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD), especially in the areas of beneficial ownership of legal entities and the identification of a PEP’s close associates.  Failure to “know your customer” (KYC) can result in high fines, criminal prosecution and reputational damage to your institution.  The widespread adoption of risk-based approaches, and increased scrutiny by FATF and other regulatory bodies – as well as the G-20 – requires diligence in identifying the risks and taking steps to mitigate them.  What is Dubai and the region’s positioning on CDD and EDD in accurately identifying beneficial ownership?

• Piercing the corporate veil: adopting best practices in obtaining beneficial ownership information
• Establishing a protocol regarding information reporting, storage and sharing
• Determining the optimum levels of ongoing due diligence to protect your organization.

Day 4: Thursday afternoon session: Leveraging Technology to Optimize Synergy among Fraud and AML Departments in Dubai
Protecting your institution from money launderers and fraudsters in an era of limited resources requires leveraging technology to create synergies between AML and fraud departments.  The right technology is not only essential to the success of your transaction monitoring program, SAR reporting and CDD, it facilitates communication between compliance, fraud, and AML professionals at your institution.  Attendees will learn how to prevent duplicating information sent to regulators in Dubai and the Middle East in general and how to raise the percentage of their true positive transaction alerts.  Attendees will also hear how AML and fraud departments can be structured for effective communication and strategies to watch parallel data flow.

• Utilizing existing technology to gain insight into customer data to prevent money laundering
• Cross-training your compliance staff to take advantage of the unique skill sets within AML and fraud departments
• Combining common processes to increase the scope and effectiveness of your compliance efforts.

Day 5: Friday morning session: Money Laundering in Dubai: Implications for Dubai and Middle East Banks
This session will review the results of Dubai government study of the flow of bulk cash from Dubai to Mexico and its subsequent laundering in Mexico.  Attendees will learn the money laundering typologies, including operaciones preocupantes (intra-account transfers), beneficiarios communes (common beneficiaries), and uso de identidad (user identity).  This session will also examine the impact of Chinese trade-based money laundering, partnerships with Russian organized crime groups and beneficial ownership structure.

• Understand which types of funds are laundered in Mexico, which aren’t, and why?
• Become familiar with detailed money laundering typologies commonly used in Mexico;
• Adopt key AML controls to avoid laundering funds from Mexican cartels.

Day 5: Friday afternoon session: The Way Forward in Anti-Money Laundering and Compliance in Dubai
This is the last panel and will discuss lessons learnt from current regulations, the future of anti-money laundering and compliance in Dubai, and compliance with FATF’s Recommendations.  Attendees will play a critical role in shaping the future of Dubai in AML/compliance.

• Collaboration between FATF, IMF and the World Bank and implementation of FATF’s Recommendations and AML/CTF in Dubai
• Lessons learnt from current AML/compliance regulations in Dubai
• The future of AML/compliance in Dubai.

References:

1. 16^th Annual International Anti-Money Laundering Conference to be held March 21-23, 2011 at the Westin Diplomat, Hollywood, Florida, USA., see http://www.moneylaunderingconference.com/2011/program.asp.
2. http://www.uaeinteract.com/russian/news/default.asp?ID=220.
3. 2^nd Annual ACAMS Anti-Money Laundering & Counter-Terrorism Financing Conference Middle East-North Africa, see http://www.amlmena.org/.