US embassy cable - 05ABUDHABI356

C O N F I D E N T I A L SECTION 01 OF 02 ABU DHABI 000356 
 
SIPDIS 
 
STATE FOR NEA/ARPI, S/CT, INL/ENT, EB/ESC 
STATE PASS FEDERAL RESERVE 
SECDEF FOR OSD, OUSD (P) 
NSC FOR PATRICK HEFFERNAN 
 
E.O. 12958: DECL: 01/24/2015 
TAGS: ECON, EFIN, ETTC, PTER, TC 
SUBJECT: UAE TERRORIST FINANCING AND MONEY LAUNDERING LAWS, 
REGULATIONS, AND PROCEDURES 
 
 (U) Classified by Ambassador Michele J. Sison, reason 1.4 
(b) and (d). 
 
1.  (SBU)  Summary:  Abdelrahim Mohammed Al Awadi, head of 
the Anti-Money Laundering Unit at the Central Bank (AMLSCU) 
presented UAE laws and regulations governing money laundering 
and terrorist financing to USG officials at the Terrorist 
Financing Subcommittee of the January 11-12 Joint Military 
Commission.  Al Awadi also spoke about US/UAE cooperation and 
implementation of terrorist financing sanctions against Al 
Qaida and the Taliban.  Additionally, Al Awadi asked several 
questions related to judicial action on terrorist financing 
cases.  He also provided statistics on Central Bank actions 
on money laundering.  End summary. 
 
2.  (C)  Al Awadi participated actively in the JMC 
subcommittee, asking the most questions of any of the UAE 
participants.  He pointedly asked how intelligence 
information could be used to build legal cases, and 
specifically stated that intelligence information is often 
classified or unusable in a court system.  While 
acknowledging that UN designations are a useful tool, he 
seemed interested in exploring other ways to be able to 
legally justify the freezing of accounts and actions based on 
intelligence sources. 
 
3.  (U)  Abdelrahim gave a lengthy presentation on the 
specific UAE laws, regulations, and procedures governing 
terrorist financing and money laundering: 
 
--  Federal Law No. 3 of 1987 on the Penal Code includes 
Anti-Money Laundering provisions. 
 
--  Regulation No. 14/93 of June 1993 from the Central Bank 
regarding the opening of bank accounts.  The regulation 
consists of eleven articles including KYC (Know your 
Customer) provisions and requires financial institutions to 
oversee transfers in banks and report suspicious 
transactions.  The regulation also stipulates that an NGO 
cannot open an account without appropriate approval from the 
Ministry of Labor and Social Affairs.  The law requires banks 
to verify customer documentation, and is meant to prevent 
banks from opening secret accounts. 
 
--  Regulation No. 163/98 of February 1998 deals with 
suspicious transactions.  It requests banks to provide the 
Central Bank with information on transactions whose size is 
not commensurate with the income of the concerned individual, 
or which does not have an economic cause or clear legal 
objective. 
 
--  The Central Bank set up a special unit to investigate 
fraud and suspicious cases in 1998.  It became the Anti-Money 
Laundering and Suspicious Cases Unit (AMLSCU) at Central Bank 
in 2000.  AMLSCU operates under the aegis of the National 
Anti-Money Laundering Committee. 
 
--  The National Anti-Money Laundering Committee (NAMLC) was 
set up in November 2000 under the Chairmanship of the 
Governor of the Central Bank, and includes representatives 
from the Ministry of Foreign Affairs, Central Bank, Ministry 
of Justice, Ministry of Finance and Industry, Ministry of 
Economy and Planning, and Ministry of Interior.  NAMLC has 
responsibility for coordinating anti-money laundering 
policies in the UAE.  After September 11, the NAMLC took on 
the role of combating terrorism financing in the UAE. 
 
--  Regulation 24/2000 issued in November 2000 lists 
procedures for preventing money laundering.  It expanded 
requirements on customer identification and reporting of 
suspicious transactions. 
 
--  A Central Bank Regulation issued in January 2002 requires 
that individuals (over 18 years of age) declare amounts of 
cash greater than AED 40,000 imported into the country. 
 
--  Regulation 1815/2001 requests moneychangers to record 
details of money changing transactions of AED 2,000 or more 
($544), which is the lowest threshold in the world.  The 
regulation also requires moneychangers to verify customer 
identity. 
 
--  Free Trade Zone Authorities are required to implement 
procedures related to establishing companies and identifying 
the persons involved in setting up the companies. 
 
--  4/2002 Law from January 22, 2002 which criminalizes money 
laundering. 
--  Hawala broker regulations which require hawala dealers to 
provide the Central Bank with details regarding remittances 
and to report any suspicious transactions.  There are 
currently 151 hawalas registered, 128 of which have their 
certificates.  The remaining 23 are in the process of 
completing the Central Bank,s requirements. 
 
--  The UAE will host the third Hawala Conference in April 
2005 
 
--  Ministry of Economy and Planning issued regulations 
detailing customer identification and suspicious transactions 
reporting requirements for insurance companies and brokers, 
accountants and auditors. 
 
--  The Securities and Commodities Authority issued a 
regulation concerning procedures for anti-money laundering, 
which apply to the securities markets licensed in the UAE and 
their brokers.  Settlement of transactions of amounts of AED 
40,000 and above are required to be documented with customer 
verification. 
 
--  Federal Law 1/2004 (issued July 28, 2004) on combating 
terrorism. 
 
--  Formed a National Anti Terrorism Commission Committee 
that is governed by Federal Law 1/2004 on Combating Terrorism 
Offenses. 
 
4.  (SBU)  Al Awadi also stated that the UAE cooperates with 
the US and other partners in the fight against money 
laundering and terrorist financing.  He mentioned that teams 
from the UK, Germany, Turkey, Pakistan, and GCC countries 
have visited the UAE to discuss and implement plans regarding 
money laundering and terrorist financing.  Additionally, the 
UAE has hosted 78 training sessions, seminars, conferences, 
and workshops on this topic in recent years. 
 
5.  (U)  The UAE Central Bank has frozen 21 accounts pursuant 
to UNSCRs on combating terrorist financing since November. 
In terms of international cooperation, the AMLSCU has 
responded to 484 requests from counterparts and frozen 23 
accounts based on this information.  The AMLSCU has referred 
88 cases to counterparts and frozen 13 accounts based on the 
information provided.  From December 2000 to November 30, 
2004, AMLSCU received reports of 2259 suspicious 
transactions, 2148 of which were investigated by AMLSCU, the 
Central Bank, or law enforcement officials.  In 27 cases, the 
Central Bank issued freeze orders and referred the cases to 
the Public Prosecutor.  There are 12 cases currently in the 
process of prosecution for money laundering.  Nine cases are 
currently in the process of judgment for money laundering and 
confiscation of proceeds, al Awadi reported. 
SISON