UAE ANTI-MONEY LAUNDERING ACTIONS

UNCLAS SECTION 01 OF 02 ABU DHABI 004794

SIPDIS

SENSITIVE

STATE FOR NEA/ARP, S/CT, INL/ENT, EB/ESC
STATE PASS FEDERAL RESERVE
TREASURY FOR ZARATE, GLASER, AND MURDEN

E.O. 12958: NA
TAGS: EFIN ETTC PTER ECON TC
SUBJECT: UAE ANTI-MONEY LAUNDERING ACTIONS

REF: Abu Dhabi 4426

This is a joint Abu Dhabi - Dubai cable.


1. (SBU) Summary: The recent visit of the Financial
Services Volunteer Corps to the UAE gave emboffs
and congenoffs a chance to discuss UAE anti-money
laundering efforts with a number of different
financial sector interlocutors. The overwhelming
perception among bankers in the UAE is that the UAE
Central Bank is committed to fighting money
laundering and has come down hard on financial
institutions to comply with the regulations. Our
interlocutors admit that the UAE had to start its
anti-money laundering efforts from "a low base" but
state that it is "catching up fast." They credit
the Central Bank Governor with pushing this effort.
End Summary.


2. (SBU) UAE Central Bank Governor Sultan Nasser
Al-Suweidi told the FSVC that his goal was for
banks and financial institutions to be managed and
regulated by high quality people and to "keep away
from trouble." When FSVC Executive Director J.
Andrew Spindler praised him for defining success in
terms of high quality standards rather than
attracting business, Al-Suweidi noted that a
country's reputation was key to whether it
attracted or lost business. He added that the
recent IMF and World Bank Annual Meetings in Dubai
brought significant benefit to the UAE, but the
UAE's new prominence on the global financial stage
could potentially attract the wrong type of
attention (i.e., sources of dirty money) and the
UAE needed to be vigilant.


3. (U) Al-Suweidi explained the process that is
currently in place to deal with money transfers.
The "remitter" (i.e., transferor) must establish
his proper identity if the transfer is over 2,000
dirhams (approximately $500). The beneficiary, of
course, must always establish his identity. If the
beneficiary is in the UAE, he or she must establish
identity via a passport or national identity card.
Money exchangers must keep records. Money
transfers of 40,000 dirhams ($11,000) must be
reported to the Central Bank. The Central Bank has
also trained bankers, moneychangers and customs
agents in how to file suspicious transaction
reports. He noted that customs agents had already
filed 78 reports. The governor also said that the
Central Bank was investigating about 80% of all
reports in order to build up its understanding of
the situation.


4. (SBU) Al-Suweidi gave his view of Hawala. He
said that the Central Bank was in the process of
voluntarily registering Hawala dealers and had
received applications from 83 dealers. He stated
that for now, the Central Bank had decided to take
a gradual approach in regard to Hawala dealers and
"get to know them rather than scare them." He also
expressed his irritation at recent reports in U.S.
press critical of the UAE on money laundering. He
noted that the UAE had given 60,000 pages of
documentation to the U.S. and was cooperating
closely with the U.S. Attacks in the papers made
cooperation more difficult. The Governor also
noted that the UAE has had problems getting answers
to its requests for information on suspicious
transactions from the U.S. and some other
countries' FIUs.


5. (SBU) Both UAE and expatriate bankers here give
the Central Bank Governor generally high marks for
his commitment to fighting money laundering and for
pushing the banking system to improve. Terence
Allen, the Head of the Investment Banking Division
at National Bank of Abu Dhabi (protect) said that
the governor had done a "great job" in improving
anti-money laundering activities in the banking
sector. Abdullah Saleh the Managing Director of
the National Bank of Dubai (NBD) (protect) said
that the Central Bank is key to the country's anti-
money laundering efforts and that anti-money
laundering regulations were "rigidly enforced." He
added that that every time bankers meet with
Governor Al-Suweidi, he tells them to "do your job"
by combating money laundering and to "protect the
reputation of the UAE. Governor Al-Suweidi is
always pushing banks to improve their anti-money
laundering training. Saleh stated that NBD had
always kept tight control over transactions even
before the UAEG implemented its law, and noted that
it was easy for NBD to shift to a more controlled
regulatory environment. He implied that other
local banks probably had further to go. According
to Saleh, NBD has examined 469 transactions over
the last 6 months. A handful of those were
"suspect" and referred through the bank and to the
Anti-Money Laundering and Suspicious Crimes Unit of
the Central Bank. NBD is also careful about
accounts management and will only open fixed
deposit accounts for non-residents.


6. (U) Money laundering was also discussed in a
joint Abu Dhabi - Dubai American business
roundtable lunch. The consensus was that the law
was good, but that implementation of regulations
was still catching up. One lawyer complained that
her clients were having problems determining how to
unfreeze their assets. She said that the Central
Bank could freeze assets for seven days after which
the Public Prosecutor's Office could decide to
extend the freeze during the course of an
investigation. Her problem, she said was finding
out what information was needed to get the assets
unfrozen, especially when her clients had to deal
with the Central Bank, the Dubai Criminal
Investigation Division or the Public Prosecutor's
office.


7. (U) Representatives of the Dubai International
Financial Center (DIFC) also noted Governor Al-
Suweidi's commitment to combating money laundering.
Although they tried to stress that their
regulations were broader than the Central Bank's
and covered insurance companies and other
institutions that the Central Bank does not
regulate, they freely admitted that the UAE Anti-
Money Laundering law will apply in the DIFC and
that the Central Bank has supervisory authority in
that area. Their draft anti-money laundering
regulations specifically refer to the applicability
of the UAE anti-money laundering law in the DIFC.


8. (SBU) Comment: We have long regarded Governor
Al-Suweidi as committed to combating money
laundering. The bankers' and lawyers' comments are
a welcome confirmation that the Central Bank and
the UAEG are actively implementing their anti-money
laundering efforts. Al-Suweidi runs one of the
UAE's most effective federal institutions, and his
leadership has been instrumental in the UAE's anti-
money laundering efforts. End Comment.

Albright